Finance (No. 2) Act 1979

PART III Petroleum Revenue Tax

18 Increase of rate

(1) In section 1(2) of the [1975 c. 22.] Oil Taxation Act 1975 (rate of petroleum revenue tax) for the words " 45 per cent" there shall be substituted the words " 60 per cent ".

(2) This section shall have effect in relation to chargeable periods ending after 31st December 1978.

19 Reduction of uplift for allowable expenditure

(1) In section 2(9)(b)(ii) and (c)(ii) of the Oil Taxation Act 1975 (uplift of 75 per cent, of allowable expenditure) for " 75 per cent." there shall be substituted " 35 per cent. ".

(2) Subject to subsection (3) below, subsection (1) above has effect in relation to expenditure incurred in pursuance of a contract entered into on or after 1st January 1979.

(3) Where expenditure is incurred in pursuance of a contract entered into before the said 1st January but is attributable to a request for an alteration or addition made, or other instruction given, on or after that date by or on behalf of the person incurring the expenditure to another party to the contract, subsection (1) above shall have effect in relation to that expenditure as if the percentage to be substituted for 75 per cent, were 66 2/3 per cent.

(4) Where under paragraph 2(4)(a) of Schedule 5 to the said Act of 1975 or that paragraph as applied by Schedule 6 to that Act (claims for allowable expenditure) a claim states that any expenditure is claimed as qualifying for supplement under section 2(9)(b)(ii) or (c)(ii) of that Act, then, if by virtue of this section those provisions have effect in relation to different parts of that expenditure with different percentages—

(a) the claim shall distinguish between those parts ;

(b) in paragraphs 3(1)(b), 6(1)(b), 6(2), 7(1) and 8(2) of that Schedule, and in those paragraphs as applied by the said Schedule 6, references to expenditure allowed or which ought to be allowed as qualifying for supplement or to expenditure which does so qualify shall be construed as referring separately to each of those parts; and

(c) in paragraph 5(1)(a) of that Schedule, and in that paragraph as so applied, the reference to the amount or total of the amounts stated under the said paragraph 3(1)(b) shall be construed as a reference to any amount so stated by virtue of paragraph (b) above.

(5) Where by virtue of subsection (4) above different amounts are stated under paragraph 3(1)(b) of the said Schedule 5 the reference in paragraph 3(1)(c) of that Schedule to an amount equal to the relevant percentage of the amount stated under paragraph 3(1)(b) shall be construed as a reference to an amount arrived at by applying the appropriate percentage to each of those amounts and aggregating the result.

20 Extension of allowable expenditure

(1) In section 3(1)(f) of the [1975 c. 22.] Oil Taxation Act 1975 (which allows expenditure of transporting oil from the field to the place where it is first landed in the United Kingdom) and in paragraph (b) of the definition of " production purposes " in section 12(1) of that Act, after the words " in the United Kingdom " there shall be inserted the words " or to the place in 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 place at which he could reasonably be expected to deliver it, the one nearest to the place of extraction ; ".

(2) In paragraph 2 of Schedule 4 to that Act (restriction on allowable expenditure where incurred in transactions between specified persons), for paragraphs (a) to (c) of sub-paragraph (2) there shall be substituted the words " they are connected within the meaning of section 533 of the Taxes Act ".

(3) This section shall have effect in relation to any expenditure in respect of which a claim is made after 31st December 1978.

21 Reduction of oil allowance and metrication of measurements

(1) Section 8 of the [1975 c. 22.] Oil Taxation Act 1975 (oil allowance) shall be amended as follows: —

(a) in subsection (2) (oil allowance for each chargeable period), for the words " 500,000 long tons " there shall be substituted the words " 250,000 metric tonnes ";

(b) in subsections (3) and (5) (participator's share of oil allowance and amount of allowance utilised in a chargeable period), for the words " long tons ", wherever they occur, there shall be substituted the words " metric tonnes ";

(c) in subsection (6) (total oil allowance for an oil Geld), for the words "10 million long tons ", wherever they occur, there shall be substituted the words " 5 million metric tonnes "; and

(d) in subsection (7) (equivalent of long ton)—

(i) for the words " 40,000 cubic feet" there shall be substituted the words " 1,100 cubic metres "; and

(ii) for the words " long ton " there shall be substituted the words " metric tonne ".

(2) In section 1(4) of that Act, in the definition of "the critical half year "—

(a) for the words " long tons " there shall be substituted the words " metric tonnes ";

(b) for the words " 40,000 cubic feet" there shall be substituted the words " 1,100 cubic metres "; and

(c) for the words " long ton " there shall be substituted the words " metric tonne ".

(3) In section 10(5) of that Act (equivalent of long ton)—

(a) for the words " 40,000 cubic feet" there shall be substituted the words " 1,100 cubic metres "; and

(b) for the words " long ton " there shall be substituted the words " metric tonne ".

(4) Subsections (1) and (2) above shall have effect respectively in relation to chargeable periods ending after 31st December 1978 and half years ending after that date and subsection (3) above shall be deemed to have come into force on 1st January 1979.

22 Taxation of British National Oil Corporation

(1) Section 9(1) of the [1975 c. 74.] Petroleum and Submarine Pipelines Act 1975 (exemption of British National Oil Corporation and its wholly owned subsidiaries from petroleum revenue tax) shall not have effect in relation to chargeable periods ending after 30th June 1979 ; and the provisions of subsections (2) and (3) below, being transitional provisions, shall have effect—

(a) in the case of subsection (2), for the purpose of computing the assessable profit or allowable loss accruing from any oil field to that Corporation or any company which is or has been one of those subsidiaries; and

(b) in the case of subsection (3), for the purpose of computing the assessable profit or allowable loss accruing from any oil field to any of the following persons (in this section referred to as " relevant persons ") that is to say, that Corporation, any such company and any person having an interest in an oil field, being an interest the whole or part of which in any chargeable period ending before 1st July 1979 constituted the interest in that oil field of that Corporation or one of those subsidiaries.

(2) In relation to any oil field, section 2 of the [1975 c. 22.] Oil Taxation Act 1975 shall have effect with respect to the chargeable period ending next after 30th June 1979 as if in subsections (6)(b)(ii) and (7)(b) (royalty repaid and paid in period to be taken into account) for the words " in the period " there were substituted the words " in or before the period ".

(3) If for any chargeable period—

(a) there is an amount to be taken into account by virtue of paragraph (b) or (c) of subsection (9) of the said section 2 (allowable expenditure) or both those paragraphs ; and

(b) the whole or any part of that amount is attributable to expenditure incurred before 1st July 1979,

that amount or, as the case may be, that part (including so much of it as is so taken into account by virtue of sub-paragraph (ii) of the said paragraph (b) or (c)) shall be deemed for the purposes of that Act, except section 9, to be reduced by the relevant amount or, as the case may be, by so much of the relevant amount as has not been taken into account under this subsection in computing the assessable profit or allowable loss accruing to the relevant person in question or any other person in an earlier chargeable period.

(4) In this section " the relevant amount", in relation to an oil field, means the aggregate gross profit, as defined in section 2(4) of the Oil Taxation Act 1975, accruing in chargeable periods ending before 1st July 1979 in respect of so much of the interest of the relevant person in question in that oil field as in any of those chargeable periods constituted the interest in that oil field of the British National Oil Corporation or one of its wholly owned subsidiaries; and in this subsection " wholly owned subsidiary " has the same meaning as in the [1975 c. 74.] Petroleum and Submarine Pipe-lines Act 1975.