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Finance Bill


Finance Bill
Schedule 44 — Supplementary charge: reduction for certain new oil fields
Part 2 — Pool of field allowances

343

 

Schedule 44

Section 89

 

Supplementary charge: reduction for certain new oil fields

Part 1

Reduction of adjusted ring fence profits

1     (1)  

A company’s adjusted ring fence profits for an accounting period are to be

5

reduced by the amount of the company’s pool of field allowances for that

accounting period (see Part 2).

      (2)  

But, if the profits are less than the amount of the pool, the profits are to be

reduced to nil.

Part 2

10

Pool of field allowances

Company’s pool of field allowances

2          

A company’s pool of field allowances for an accounting period (“the

relevant accounting period”) is—equation: plus[char[P],char[R]]

           

where—

15

P is the amount of the company’s pool of field allowances for the

previous accounting period that has been carried into the relevant

accounting period (see paragraphs 3 and 4), and

R is the aggregate of the amounts of field allowances for new oil fields

which the company holds (see Part 3) that are activated in respect

20

of—

(a)   

the relevant accounting period (see Part 4), and

(b)   

reference periods that fall within the relevant accounting

period (see Part 5).

Carrying part of pool of field allowances into following period

25

3     (1)  

This paragraph applies if—

(a)   

a company has a pool of field allowances for an accounting period

(“accounting period 1”), and

(b)   

the company’s adjusted ring fence profits for accounting period 1 are

reduced to nil in accordance with paragraph 1(2).

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      (2)  

A part of the company’s pool of field allowances for accounting period 1 is

to be carried into the following accounting period (“accounting period 2”).

      (3)  

The part to be carried into accounting period 2 is—equation: plus[char[F],minus[char[P]]]

           

where—

F is the amount of the company’s pool of field allowances for

35

accounting period 1, and

P is the amount of the adjusted ring fence profits for accounting period

1.

 
 

Finance Bill
Schedule 44 — Supplementary charge: reduction for certain new oil fields
Part 3 — Field allowance: when held and unactivated amount

344

 

Carrying whole of pool of field allowances into following period

4     (1)  

This paragraph applies if a company—

(a)   

has a pool of field allowances for an accounting period, but

(b)   

has no adjusted ring fence profits for the accounting period.

      (2)  

The whole of the company’s pool of field allowances for the accounting

5

period is to be carried into the following accounting period.

Part 3

Field allowance: when held and unactivated amount

Initial licensee to hold a field allowance

5     (1)  

A company that is an initial licensee in a new oil field is to hold a field

10

allowance for that field as from the beginning of the authorisation day.

      (2)  

The amount of the field allowance which the licensee is to hold at that time

is—equation: cross[char[T],char[S]]

           

where—

T is the amount of the total field allowance for the field (see paragraph

15

24);

S is the share of the equity in the field which the initial licensee has at

the beginning of the authorisation day.

Holding a field allowance on acquisition of equity share

6          

For provision about holding a field allowance by virtue of the acquisition of

20

a share of the equity in a new oil field, see paragraph 15(2).

Unactivated amount of a field allowance

7     (1)  

This paragraph applies if a company holds a field allowance for a new oil

field by virtue of paragraph 5 or 15(2).

      (2)  

The unactivated amount of that allowance at a particular time (“the relevant

25

time”) is—equation: plus[id[plus[char[R],char[E]]],minus[id[plus[char[A],char[D]]]]]

           

where—

R is the amount of the field allowance which the company held before

the relevant time by virtue of paragraph 5 or 15(2),

E is the total amount of the field allowance received before the relevant

30

time by virtue of paragraph 15(1) (company already holding field

allowance acquires equity share),

A is the total amount of the field allowance activated in respect of—

(a)   

accounting periods ending before the relevant time, or

(b)   

reference periods ending before the relevant time, and

35

D is the total amount of reductions in the field allowance made before

the relevant time by virtue of paragraph 14 (company disposes of

equity share).

 
 

Finance Bill
Schedule 44 — Supplementary charge: reduction for certain new oil fields
Part 5 — Change in equity share: activation of allowance

345

 

      (3)  

A company ceases to hold a field allowance for a new oil field if the

unactivated amount of that allowance falls to nil.

Part 4

No change in equity share: activation of allowance

Introduction

5

8     (1)  

This Part applies to a company in respect of a new oil field and an accounting

period if the following conditions are met.

      (2)  

Condition A is that the company is a licensee in the field for the whole of the

accounting period.

      (3)  

Condition B is that the company’s share of the equity in the field is the same

10

during the whole of the accounting period.

      (4)  

Condition C is that the company holds an unactivated amount of field

allowance for the field at the beginning of the accounting period.

      (5)  

Condition D is that the company has relevant income from the new oil field

in the accounting period.

15

Activation of field allowance

9     (1)  

An amount of the company’s field allowance for the new oil field is to be

activated in respect of the accounting period.

      (2)  

The amount of the field allowance to be activated is the smallest of the

following amounts—

20

(a)   

the relevant activation limit,

(b)   

the company’s relevant income from the field in the accounting

period, and

(c)   

the unactivated amount of the field allowance which the company

holds at the beginning of the accounting period.

25

      (3)  

The relevant activation limit is—equation: cross[cross[over[char[T],num[5.0000000000000000,"5"]],char[E]],over[char[N],num[

365.0000000000000000,"365"]]]

           

where—

T is the amount of the total field allowance for the field (see paragraph

24),

E is the company’s share of the equity in the field during the accounting

30

period, and

N is the number of days in the accounting period.

Part 5

Change in equity share: activation of allowance

Introduction

35

10    (1)  

This Part applies to a company in respect of a new oil field and an accounting

period if the following conditions are met.

 
 

Finance Bill
Schedule 44 — Supplementary charge: reduction for certain new oil fields
Part 5 — Change in equity share: activation of allowance

346

 

      (2)  

Condition A is that the company is a licensee in the field for the whole, or for

part, of the accounting period.

      (3)  

Condition B is that the company’s share of the equity in the field is different

at different times during the accounting period.

      (4)  

Condition C is that the company holds an unactivated amount of field

5

allowance for the field at any time during the accounting period.

      (5)  

Condition D is that the company has relevant income from the field in the

accounting period.

      (6)  

In a case where a company has three or more different shares of the equity

in a new oil field during a particular day, this Part (in particular provisions

10

relating to the beginning or end of a day) has effect subject to the necessary

modifications.

Reference periods

11    (1)  

For the purposes of this Part, the accounting period, or (if the company is not

a licensee for the whole of the accounting period) the part or parts of the

15

accounting period for which the company is a licensee, is to be divided into

reference periods.

      (2)  

A reference period is a period of consecutive days that meets the following

conditions.

      (3)  

Condition A is that, at the beginning of each day in the period, the company

20

is a licensee in the new oil field.

      (4)  

Condition B is that, at the beginning of each day in the period, the

company’s share of the equity in the field is the same.

      (5)  

Condition C is that, at the beginning of the first day of the period, the

company holds an unactivated amount of field allowance for the field.

25

      (6)  

Condition D is that each day in the period falls within the accounting period.

Activation of field allowance

12    (1)  

An amount of the company’s field allowance for the new oil field is to be

activated in respect of each reference period.

      (2)  

The amount of the field allowance to be activated is the smallest of the

30

following amounts—

(a)   

the relevant activation limit,

(b)   

the company’s relevant income from the field in the reference period,

and

(c)   

the unactivated amount of the field allowance which the company

35

holds at the beginning of the reference period.

      (3)  

The relevant activation limit is—equation: cross[cross[over[char[T],num[5.0000000000000000,"5"]],char[E]],over[char[R],num[

365.0000000000000000,"365"]]]

           

where—

T is the amount of the total field allowance for the field (see paragraph

24),

40

 
 

Finance Bill
Schedule 44 — Supplementary charge: reduction for certain new oil fields
Part 6 — Change in equity share: transfer of field allowance

347

 

E is the company’s share of the equity in the field during the reference

period, and

R is the number of days in the reference period.

      (4)  

The company’s relevant income from the field in the reference period is—equation: cross[char[I],over[char[R],char[L]]]

           

where—

5

I is the company’s relevant income from the field in the whole of the

accounting period;

R is the number of days in the reference period;

L is the number of days in the accounting period for which the

company is a licensee in the new oil field.

10

Part 6

Change in equity share: transfer of field allowance

Introduction

13    (1)  

This Part applies if the following conditions are met.

      (2)  

Condition A is that a company that is a licensee in a new oil field (“the

15

transferor”) disposes of the whole or a part of its share of the equity in the

new oil field (and in this Part each of those to which a share of the equity is

disposed of is referred to as “a transferee”).

      (3)  

Condition B is that, immediately before the disposal, the transferor holds an

unactivated amount of field allowance for the new oil field.

20

      (4)  

Sub-paragraph (5) applies when—

(a)   

determining (for the purposes of this paragraph) whether a

transferor holds an unactivated amount of field allowance

immediately before the disposal (“the relevant time”), and

(b)   

determining (for the purposes of paragraph 14) the unactivated

25

amount of field allowance which a transferor holds at the relevant

time;

           

but it applies only if an amount of field allowance for the new oil field (“the

relevant amount”) has, by virtue of paragraph 12, been activated in respect

of the reference period that ends because of the disposal.

30

      (5)  

When making the determination, the relevant amount of the field allowance

must be treated as having been activated at a time before the relevant time.

      (6)  

In a case where a company has three or more different shares of the equity

in a new oil field during a particular day, this Part (in particular provisions

relating to the beginning or end of a day) has effect subject to the necessary

35

modifications.

 
 

Finance Bill
Schedule 44 — Supplementary charge: reduction for certain new oil fields
Part 7 — Miscellaneous

348

 

Reduction of field allowance if equity disposed of

14    (1)  

The unactivated amount of the field allowance for the new oil field which

the transferor holds immediately before the disposal is to be reduced by the

following amount—equation: cross[char[F],over[plus[times[char[E],num[1.0000000000000000,"1"]],minus[times[char[

E],num[2.0000000000000000,"2"]]]],times[char[E],num[1.0000000000000000,"1"]]]]

           

where—

5

F is the unactivated amount of the field allowance which the transferor

holds immediately before the disposal,

E1 is the transferor’s share of the equity in the new oil field immediately

before the disposal, and

E2 is the transferor’s share of the equity in the new oil field immediately

10

after the disposal.

      (2)  

This paragraph has effect at the end of the day on which the disposal takes

place.

Acquisition of field allowance if equity acquired

15    (1)  

If a transferee holds a field allowance for the new oil field immediately

15

before the disposal, the unactivated amount of the field allowance is to be

increased by the amount calculated in accordance with sub-paragraph (4).

      (2)  

If a transferee does not hold a field allowance for the new oil field

immediately before the disposal, the transferee is to hold a field allowance

for the new oil field.

20

      (3)  

The amount of the field allowance which the transferee is to hold is

calculated in accordance with sub-paragraph (4).

      (4)  

The amount referred to in sub-paragraphs (1) and (3) is—equation: cross[char[R],over[times[char[E],num[3.0000000000000000,"3"]],plus[times[char[E],

num[1.0000000000000000,"1"]],minus[times[char[E],num[2.0000000000000000,"2"]]]]]]

           

where—

R is the amount of the reduction determined in accordance with

25

paragraph 14,

E3 is the share of the equity in the new oil field that the transferee has

acquired from the transferor, and

E1 and E2 are the same as in paragraph 14.

      (5)  

This paragraph has effect at the end of the day on which the disposal takes

30

place.

Part 7

Miscellaneous

Adjustments

16         

If there is any alteration in a company’s adjusted ring fence profits for an

35

accounting period after this Schedule has had effect in relation to the profits,

any necessary adjustments to the operation of this Schedule (whether in

relation to the profits or otherwise) are to be made (including any necessary

 
 

Finance Bill
Schedule 44 — Supplementary charge: reduction for certain new oil fields
Part 8 — Interpretation

349

 

adjustments to the effect of Part 1 on the profits or to the calculation of the

company’s pool of field allowances for a subsequent accounting period).

Orders

17    (1)  

The Commissioners for Her Majesty’s Revenue and Customs may by order

make provision about the oil fields that are qualifying oil fields for the

5

purposes of this Schedule

      (2)  

The Commissioners for Her Majesty’s Revenue and Customs may by order

make provision about the amount of the total field allowance for any

description of new oil field (whether or not provision has been made under

sub-paragraph (1) about that description of new oil field).

10

      (3)  

An order under this paragraph may, in particular, amend any or all of

paragraphs 20 to 24.

      (4)  

An order under this paragraph is to be made by statutory instrument.

      (5)  

No order may be made under this paragraph unless a draft of the instrument

containing it has been laid before, and approved by a resolution of, the

15

House of Commons.

Part 8

Interpretation

New oil fields

18         

In this Schedule “new oil field” means an oil field—

20

(a)   

which is a qualifying oil field, and

(b)   

whose development is authorised at any time on or after 22 April

2009.

Authorising development

19    (1)  

In this Schedule a reference to authorisation of development of an oil field is

25

a reference to a national authority—

(a)   

granting a licensee consent for development for the field,

(b)   

serving on a licensee a programme of development for the field, or

(c)   

approving a programme of development for the field.

      (2)  

In this paragraph—

30

“consent for development”, in relation to an oil field, does not include

consent which is limited to the purpose of testing the characteristics

of an oil-bearing area;

“development”, in relation to an oil field, means winning oil from the

field otherwise than in the course of searching for oil or drilling

35

wells;

“national authority” means—

(a)   

the Secretary of State, or

(b)   

a Northern Ireland Department.

 
 

 
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