Taxation (International and Other Provisions) Bill

House of Commons

Session 2009 - 10
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Other Bills before Parliament

Taxation (International and Other Provisions) Bill

Taxation (International and Other Provisions) Bill
Part 10 — General provisions
193

Final provisions
374
Minor and consequential amendments
Schedule 8 (minor and consequential amendments, including amendments for
purposes connected with other tax law rewrite Acts) has effect.
375
Power to make consequential provision
5
(1)
The Treasury may by order make such provision as the Treasury consider
appropriate in consequence of this Act.
(2)
The power conferred by subsection (1) may not be exercised after 31 March
2013.
(3)
An order under this section may amend, repeal or revoke any provision made
10
by or under an Act.
(4)
An order under this section may contain provision having retrospective effect.
(5)
An order under this section may contain incidental, supplemental,
consequential and transitional provision and savings.
(6)
In subsection (3) “Act” includes an Act of the Scottish Parliament and Northern
15
Ireland legislation.
376
Power to undo changes
(1)
The Treasury may by order make provision, in relation to a case in which the
Treasury consider that a provision of this Act changes the effect of the law, for
the purpose of returning the effect of the law to what it would have been if this
20
Act had not been passed.
(2)
The power conferred by subsection (1) may not be exercised after 31 March
2013.
(3)
An order under this section may amend, repeal or revoke any provision made
by or under—
25
(a)
this Act, or
(b)
any other Act.
(4)
An order under this section may contain provision having retrospective effect.
(5)
An order under this section may contain incidental, supplemental,
consequential and transitional provision and savings.
30
(6)
In subsection (3)(b) “Act” includes an Act of the Scottish Parliament and
Northern Ireland legislation.
377
Transitional provisions and savings
(1)
Schedule 9 (transitional provisions and savings) has effect.
(2)
The Treasury may by order make such transitional or saving provision as the
35
Treasury consider appropriate in connection with the coming into force of this
Act.
(3)
An order under this section may contain provision having retrospective effect.

Taxation (International and Other Provisions) Bill
Part 10 — General provisions
194

378
Repeals and revocations
(1)
Schedule 10 (repeals and revocations, including of spent enactments and
including repeals for purposes connected with other tax law rewrite Acts) has
effect.
(2)
If—
5
(a)
CTA 2010 repeals or revokes a provision and the repeal or revocation is
for corporation tax purposes only (see section 1181(2) of that Act), and
(b)
this Act also repeals or revokes the provision,

the repeal or revocation of the provision by this Act is for all purposes other
than corporation tax purposes.
10
379
Index of defined expressions
(1)
Schedule 11 (index of defined expressions that apply for purposes of Parts 2 to
8) has effect.
(2)
That Schedule lists the places where some of the expressions used in Parts 2 to
8 are defined or otherwise explained.
15
380
Extent
(1)
This Act extends to England and Wales, Scotland and Northern Ireland (but
see subsection (2)).
(2)
An amendment, repeal or revocation contained in Schedule 7, 8 or 10 has the
same extent as the provision amended, repealed or revoked.
20
381
Commencement
(1)
This Act comes into force on 1 April 2010 and has effect—
(a)
for corporation tax purposes, for accounting periods ending on or after
that day,
(b)
for income tax and capital gains tax purposes, for the tax year 2010-11
25
and subsequent tax years, and
(c)
for petroleum revenue tax purposes, for chargeable periods beginning
on or after 1 July 2010.
(2)
Subsection (1) does not apply to the following provisions (which therefore
come into force on the day on which this Act is passed)—
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(a)
section 372,
(b)
section 373,
(c)
the amendments in TCGA 1992 and ITA 2007 made by Part 13 of
Schedule 8,
(d)
section 374 so far as relating to those amendments,
35
(e)
section 375,
(f)
section 376,
(g)
section 377(2) and (3),
(h)
section 380,
(i)
this section, and
40
(j)
section 382.

Taxation (International and Other Provisions) Bill
Part 10 — General provisions
195

382
Short title
This Act may be cited as the Taxation (International and Other Provisions) Act
2010.

Taxation (International and Other Provisions) Bill
Schedule 1 — Oil activities: new Chapter 16A of Part 2 of ITTOIA 2005
196

Schedules
Schedule 1
Section 364

Oil activities: new Chapter 16A of Part 2 of ITTOIA 2005
1
ITTOIA 2005 is amended as follows.
2
After section 225 insert—
5
“Chapter 16A
Oil activities
Basic definitions
225A
Meaning of “oil extraction activities”
(1)
In this Chapter “oil extraction activities” means activities within any
10
of subsections (2) to (5) (but see also section 225M(6)).
(2)
Activities of a person in searching for oil in the United Kingdom or a
designated area or causing such searching to be carried out for that
person.
(3)
Activities of a person in extracting, or causing to be extracted for that
15
person, oil at any place in the United Kingdom or a designated area
under rights which—
(a)
authorise the extraction, and
(b)
are held by that person.
(4)
Activities of a person in transporting, or causing to be transported for
20
that person, oil extracted at any such place not on dry land under
rights which—
(a)
authorise the extraction, and
(b)
are held by that person,

if the transportation meets condition A or B (see subsections (6) and
25
(7)).
(5)
Activities of a person in effecting, or causing to be effected for that
person, the initial treatment or initial storage of oil won from any oil
field under rights which—
(a)
authorise its extraction, and
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(b)
are held by that person.
(6)
Condition A is that the transportation is to the place where the oil is
first landed in the United Kingdom.
(7)
Condition B is that the transportation—

Taxation (International and Other Provisions) Bill
Schedule 1 — Oil activities: new Chapter 16A of Part 2 of ITTOIA 2005
197

(a)
is to the place in the United Kingdom, or
(b)
in the case of oil first landed in another country, is to the place
in that or any other country (other than the United Kingdom),

at which the seller in a sale at arm’s length could reasonably be
expected to deliver it (or, if there is more than one such place, the one
5
nearest to the place of extraction).
(8)
The definition of “initial storage” in section 12(1) of OTA 1975 applies
for the purposes of this section.
(9)
But in its application for those purposes in relation to the person
mentioned in subsection (5) and to oil won from any one oil field,
10
that definition is to have effect as if the reference to the maximum
daily production rate of oil for the field mentioned in that definition
were to a share of that maximum daily production rate proportionate
to that person’s share of the oil won from that field.
(10)
In this section “initial treatment” has the same meaning as in Part 1
15
of OTA 1975 (see section 12(1) of that Act).
225B
Meaning of “oil rights”
In this Chapter “oil rights” means—
(a)
rights to oil to be extracted at any place in the United
Kingdom or a designated area, or
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(b)
rights to interests in or to the benefit of such oil.
225C
Meaning of “ring fence income”
In this Chapter “ring fence income” means income arising from oil
extraction activities or oil rights.
225D
Meaning of “ring fence trade”
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In this Chapter “ring fence trade” means activities which—
(a)
are within the definition of “oil-related activities” in section
16(2) (oil extraction and related activities), and
(b)
constitute a separate trade (whether because of section 16(1)
or otherwise).
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225E
Other definitions
In this Chapter—
“chargeable period” has the same meaning as in Part 1 of OTA
1975 (see section 1(3) of that Act),
“designated area” means an area designated by Order in
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Council under section 1(7) of the Continental Shelf Act 1964,
“oil” means any substance won or capable of being won under
the authority of a licence granted under Part 1 of the
Petroleum Act 1998 or the Petroleum (Production) Act
(Northern Ireland) 1964 (c. 28 (N.I.)), other than methane gas
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won in the course of operations for making and keeping
mines safe,
“oil field” has the same meaning as in Part 1 of OTA 1975 (see
section 12(1) of that Act),
“OTA 1975” means the Oil Taxation Act 1975, and
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Taxation (International and Other Provisions) Bill
Schedule 1 — Oil activities: new Chapter 16A of Part 2 of ITTOIA 2005
198

“participator” has the same meaning as in Part 1 of OTA 1975
(see section 12(1) of that Act).
Oil valuation
225F
Valuation where market value taken into account under section 2 of
OTA 1975
5
(1)
This section applies if a person disposes of oil in circumstances such
that the market value of the oil—
(a)
falls to be taken into account under section 2 of OTA 1975,
otherwise than by virtue of paragraph 6 of Schedule 3 to that
Act, in calculating for petroleum revenue tax purposes the
10
assessable profit or allowable loss accruing to that person in
a chargeable period from an oil field, or
(b)
would so fall but for section 10 of that Act.
(2)
For income tax purposes, the disposal of the oil, and its acquisition
by the person to whom it was disposed of, are to be treated as having
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been for a consideration equal to the market value of the oil—
(a)
as so taken into account under section 2 of that Act, or
(b)
as would have been so taken into account under that section
but for section 10 of that Act.
225G
Valuation where disposal not sale at arm’s length
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(1)
This section applies if conditions A, B and C are met.
(2)
Condition A is that a person disposes of oil acquired by the person—
(a)
in the course of oil extraction activities carried on by the
person, or
(b)
as a result of oil rights held by the person.
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(3)
Condition B is that the disposal is not a sale at arm’s length (as
defined in paragraph 1 of Schedule 3 to OTA 1975).
(4)
Condition C is that section 225F does not apply in relation to the
disposal.
(5)
For income tax purposes, the disposal of the oil, and its acquisition
30
by the person to whom it was disposed of, are to be treated as having
been for a consideration equal to the market value of the oil.
(6)
Paragraphs 2 and 3A of Schedule 3 to OTA 1975 (definition of market
value of oil including light gases) apply for the purposes of this
section as they apply for the purposes of Part 1 of that Act, but with
35
the following modifications.
(7)
Those modifications are that—
(a)
any reference in paragraph 2 to the notional delivery day for
the actual oil is to be read as a reference to the day on which
the oil is disposed of as mentioned in this section, and
40
(b)
paragraph 2(4) is to be treated as omitted.
225H
Valuation where excess of nominated proceeds
(1)
This section applies if an excess of nominated proceeds for a
chargeable period—

Taxation (International and Other Provisions) Bill
Schedule 1 — Oil activities: new Chapter 16A of Part 2 of ITTOIA 2005
199

(a)
is taken into account in calculating a person’s profits under
section 2(5)(e) of OTA 1975, or
(b)
would have been so taken into account if the person were
chargeable to tax under OTA 1975 in respect of an oil field.
(2)
For income tax purposes, the amount of the excess is to be added to
5
the consideration which the person is treated as having received in
respect of oil disposed of by that person in the period.
225I
Valuation where relevant appropriation but no disposal
(1)
This section applies if conditions A and B are met.
(2)
Condition A is that a person makes a relevant appropriation of oil
10
without disposing of it.
(3)
Condition B is that the person does so in circumstances such that the
market value of the oil—
(a)
falls to be taken into account under section 2 of OTA 1975 in
calculating for petroleum revenue tax purposes the
15
assessable profit or allowable loss accruing to that person in
a chargeable period from an oil field, or
(b)
would so fall but for section 10 of that Act.
(4)
For income tax purposes, the person is to be treated as having, at the
time of the appropriation—
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(a)
sold the oil in the course of the separate trade consisting of
activities falling within the definition of “oil-related
activities” in section 16(2) (oil extraction and related
activities), and
(b)
purchased it in the course of the separate trade consisting of
25
activities not so falling.
(5)
For income tax purposes, that sale and purchase is to be treated as
having been at a price equal to the market value of the oil—
(a)
as so taken into account under section 2 of OTA 1975, or
(b)
as would have been so taken into account under that section
30
but for section 10 of that Act.
(6)
In this section “relevant appropriation” has the meaning given by
section 12(1) of OTA 1975.
225J
Valuation where appropriation to refining etc
(1)
This section applies if conditions A, B and C are met.
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(2)
Condition A is that a person appropriates oil acquired by the
person—
(a)
in the course of oil extraction activities carried on by the
person, or
(b)
as a result of oil rights held by the person.
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(3)
Condition B is that the oil is appropriated to refining or to any use
except the production purposes of an oil field (as defined in section
12(1) of OTA 1975).
(4)
Condition C is that section 225I does not apply in relation to the
appropriation.
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