Finance Bill

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Session 2008 - 09
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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—

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).
30
      (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—

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—

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—

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—

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—

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—

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—

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—

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.