Chapter 7: Reduction of supplementary charge for certain new oil fields
Overview
1081.This Chapter provides an allowance, a “field allowance”, which can reduce a company’s adjusted ring fence profits from oil and gas production in the UK and UKcontinental shelf (UKCS).
1082.The allowance is available to certain categories of new oil and gas fields in the UK/UKCS – small fields, ultra heavy oil fields and ultra high pressure/high temperature fields. Allowances from a company’s interests in all qualifying fields in an accounting period are then pooled and offset against adjusted ring fence profits. Any unused amounts in the pool are carried forward to the next accounting period.
Section 333: Reduction of adjusted ring fence profits
1083.This section provides that a company’s ring fence profits are to be reduced by the company’s pool of field allowances. It is based on paragraph 1 of Schedule 44 to FA 2009.
Section 334: Company’s pool of field allowances
1084.This section provides that a company’s pool of field allowances for an accounting period is the amount of the company’s pool of field allowances that is carried forward from the previous accounting period plus the aggregate of field allowances activated in the accounting period. It is based on paragraph 2 of Schedule 44 to FA 2009.
Section 335: Carrying part of pool of field allowances into following period
1085.This section provides the rules for determining the amount of field allowances that are carried forward into a future accounting period. It is based on paragraph 3 of Schedule 44 to FA 2009.
Section 336: Carrying whole of pool of field allowances into following period
1086.This section provides the rules for determining when the whole of the company’s pool of field allowances is carried forward into a future accounting period. It is based on paragraph 4 of Schedule 44 to FA 2009.
Section 337: Initial licensee to hold a field allowance
1087.This section provides that from the day a new oil field is licensed, a company that is an initial licensee holds a field allowance determined by the company’s equity share in the field. It is based on paragraph 5 of Schedule 44 to FA 2009.
Section 338: Holding a field allowance on acquisition of equity share
1088.This section provides a signpost to section 347(2) (acquisition of field allowance). It is based on paragraph 6 of Schedule 44 to FA 2009.
Section 339: Unactivated amount of field allowance
1089.This section provides the rules for determining the unactivated amount of field allowance when a company acquires a field allowance by virtue of section 337 (initial licensee) or section 347(2) (acquisition of field allowance). It is based on paragraph 7 of Schedule 44 to FA 2009.
Section 340: Introduction to section 341
1090.This section provides that four conditions need to be met in respect of a new oil field for the activation of field allowance where there is no change in equity share during the accounting period. It is based on paragraph 8 of Schedule 44 to FA 2009.
Section 341: Activation of field allowance
1091.This section provides the rules for determining the amount of field allowance to be activated in an accounting period when all conditions in section 340 are met. It is based on paragraph 9 of Schedule 44 to FA 2009.
Section 342: Introduction to sections 343 and 344
1092.This section deals with the situation where a company’s equity share in a new oil field changes during the accounting period and provides four conditions which need to be met for sections 343 and 344 to apply. It is based on paragraph 10 of Schedule 44 to FA 2009.
Section 343: Reference periods
1093.This section provides a definition of reference period for the purposes of section 344 where a company is not a licensee for a whole accounting period or where the equity share changes. It is based on paragraph 11 of Schedule 44 to FA 2009.
Section 344: Activation of field allowance
1094.This section provides the calculation of field allowance for each reference period. It is based on paragraph 12 of Schedule 44 to FA 2009.
Section 345: Introduction to sections 346 and 347
1095.This section deals with the treatment of transfers of field allowance and provides the conditions which need to be met for sections 346 and 347 to apply. It is based on paragraph 13 of Schedule 44 to FA 2009.
Section 346: Reduction of field allowance if equity disposed of
1096.This sectionprovides the calculation for the remaining field allowance which a company (“the transferor”) has, after it has disposed of some of the equity interest in a new oil field. It is based on paragraph 14 of Schedule 44 to FA 2009.
Section 347: Acquisition of field allowance if equity acquired
1097.This section provides the calculation of field allowance where a company (“the transferee”) acquires an equity interest in a new oil field. It is based on paragraph 15 of Schedule 44 to FA 2009.
Section 348: Adjustments
1098.This section provides that if there is any alteration in a company’s adjusted ring fence profits, necessary adjustments are made for the purposes of this Chapter. It is based on paragraph 16 of Schedule 44 to FA 2009.
Section 349: Orders
1099.This section provides that the Commissioners for HMRC can make provision about qualifying oil fields (section 352) and the amount of the total field allowance for a new oil field (section 356). It is based on paragraph 17 of Schedule 44 to FA 2009.
Section 350: “New oil field”
1100.This section provides the definition of “new oil field” for the purposes of this Chapter. It is based on paragraph 18 of Schedule 44 to FA 2009.
Section 351: “Authorisation of development of an oil field”
1101.This section provides the definition of “authorisation of development of an oil field” for the purposes of this Chapter. It is based on paragraph 19 of Schedule 44 to FA 2009.
Section 352: “Qualifying oil field”
1102.This section provides the definition of “qualifying oil field” for the purposes of this Chapter. It is based on paragraph 20 of Schedule 44 to FA 2009.
Section 353: “Small oil field”
1103.This section provides the definition of “small oil field” for the purposes of this Chapter. It is based on paragraph 21 of Schedule 44 to FA 2009.
Section 354: “Ultra heavy oil field”
1104.This section provides the definition of “ultra heavy oil field” for the purposes of this Chapter. It is based on paragraph 22 of Schedule 44 to FA 2009.
Section 355: “Ultra high pressure/high temperature oil field”
1105.This section provides the definition of “ultra high pressure/high temperature oil field” for the purposes of this Chapter. It is based on paragraph 23 of Schedule 44 to FA 2009.
Section 356: “Total field allowance for a new oil field”
1106.This section provides the definition of “total field allowance for a new oil field” for the purposes of this Chapter. It is based on paragraph 24 of Schedule 44 to FA 2009.
Section 357: Other definitions
1107.This section provides various other definitions for the purposes of this Chapter. It is based on paragraph 25 of Schedule 44 to FA 2009.
