Corporation Tax Act 2010 (c. 4)

Part 8 U.K. Oil activities

Chapter 7 U.K. [F1 REDUCTION OF SUPPLEMENTARY CHARGE FOR ELIGIBLE OIL FIELDS]

Textual Amendments

F1 Pt. 8 Ch. 7 heading substituted (1.4.2013) by Finance Act 2012 (c. 14), Sch. 22 paras. 17, 21(2); S.I. 2013/744, art. 2

Interpretation U.K.

[F2 349A “Additionally-developed oil field” U.K.

(1) In this Chapter an oil field is an “additionally-developed oil field” if—

[F3 (a) since the time when consent for development of the oil field was first granted, the national authority has authorised a project in relation to the field,

(aa) the project is described in a further consent for development of the field, and]

(b) the project meets such conditions as may be specified in an order made by the Commissioners for Her Majesty's Revenue and Customs.

(2) In this section—

• “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 wells, and

• “national authority” means—

  (a)

  the Secretary of State, or

  (b)

  a Northern Ireland department.

(3) An order under this section may include provision having effect in relation to times before it is made, provided that it does not increase any person's liability to tax.

(4) No order may be made under this section unless a draft of the statutory instrument containing it has been laid before and approved by a resolution of the House of Commons.]

Textual Amendments

F2 S. 349A inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 22 paras. 15, 21(2)

F3 S. 349A(1)(a)(aa) substituted for s. 349A(1)(a) (retrospective to 1.4.2013) by The Additionally-developed Oil Fields Order 2013 (S.I. 2013/2910), arts. 1(1), 9

[F4 350 “New oil field” U.K.

(1) In this Chapter “ new oil field ” means an oil field—

(a) which is a qualifying oil field, and

(b) whose development (in whole or in part) is authorised for the first time on or after 22 April 2009.

(2) If all assets of an oil field which are relevant assets have been decommissioned, there is to be ignored for the purposes of subsection (1)(b) any authorisation in respect of that oil field which occurs before that decommissioning.

(3) Sub-paragraphs (2) to (9) of paragraph 7 of Schedule 1 to OTA 1975 apply for the purpose of determining whether relevant assets of an oil field are decommissioned as they apply for the purpose of determining whether qualifying assets of a relevant area are decommissioned.

(4) For the purposes of this section, an asset is a relevant asset of an oil field if—

(a) it has at any time been a qualifying asset (within the meaning of the Oil Taxation Act 1983) in relation to any participator in the field, and

(b) it has at any time been used for the purpose of winning oil from the field.]

Textual Amendments

F4 S. 350 substituted (with effect in accordance with s. 63(4) of the amending Act) by Finance Act 2011 (c. 11), s. 63(2)

351 “Authorisation of development of an oil field” U.K.

(1) In this Chapter a reference to authorisation of development of an oil field is 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 section—

• “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 wells, and

• “national authority” means—

  (a)

  the Secretary of State, or

  (b)

  a Northern Ireland department.

352 “Qualifying oil field” U.K.

In this Chapter “qualifying oil field” means an oil field that is, on the authorisation day—

(a) a small oil field,

(b) an ultra heavy oil field, F5 ...

(c) an ultra high pressure/high temperature oil field.

[F6 (d) a large deep water oil field,

(e) a large shallow water gas field, or

(f) a deep water gas field.]

Textual Amendments

F5 Word in s. 352(b) omitted (with effect in accordance with art. 8 of the amending S.I.) by virtue of The Qualifying Oil Fields Order 2012 (S.I. 2012/3153), arts. 1(1), 3

F6 S. 352(d)-(f) inserted (with effect in accordance with art. 8 of the amending S.I.) by The Qualifying Oil Fields Order 2012 (S.I. 2012/3153), arts. 1(1), 3

353 “Small oil field” U.K.

(1) In this Chapter “small oil field” means an oil field which has reserves of oil of [F7 7,000,000 tonnes] or less.

(2) For the purposes of this section and section 356(2)—

(a) the amount of reserves of oil which an oil field has is to be determined on the authorisation day, and

(b) 1,100 cubic metres of gas at a temperature of 15 degrees celsius and pressure of one atmosphere is to be counted as equivalent to one tonne.

Textual Amendments

F7 Words in s. 353(1) substituted (with effect in accordance with art. 8 of the amending S.I.) by The Qualifying Oil Fields Order 2012 (S.I. 2012/3153), arts. 1(1), 4

354 “Ultra heavy oil field” U.K.

(1) In this Chapter “ultra heavy oil field” means an oil field with oil at—

(a) an API gravity below 18 degrees, and

(b) a viscosity of more than 50 centipoise at reservoir temperature and pressure.

(2) For that purpose API gravity, in relation to oil, is the amount determined by the following calculation—

where G is the specific gravity of the oil at 15.56 degrees celsius.

355 “Ultra high pressure/high temperature oil field” U.K.

In this Chapter “ultra high pressure/high temperature oil field” means an oil field with oil at—

(a) a pressure of more than [F8 862] bar in the reservoir formation, and

(b) a temperature of more than [F9 166] degrees celsius in the reservoir formation.

Textual Amendments

F8 Figure in s. 355(a) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Qualifying Oil Fields Order 2010 (S.I. 2010/1899), arts. 1(2), 3(a)

F9 Figure in s. 355(b) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Qualifying Oil Fields Order 2010 (S.I. 2010/1899), arts. 1(2), 3(b)

[F10 355A “Large deep water oil field” U.K.

(1) In this Chapter “large deep water oil field” means an oil field that meets conditions A to C.

(2) Condition A is that the field was authorised for the first time on or after 21 March 2012.

(3) Condition B is that the field has reserves of oil of—

(a) 25,000,000 tonnes or more, but

(b) less than 55,000,000 tonnes.

(4) Condition C is that the depth of the sea above the field is greater than 1,000 metres.

(5) For the purposes of this section and section 356(4)—

(a) the amount of reserves of oil which an oil field has is to be determined on the authorisation day,

(b) 1,100 cubic metres of gas at a temperature of 15 degrees celsius and pressure of one atmosphere is to be counted as equivalent to one tonne, and

(c) the depth of the sea above an oil field is to be measured at the lowest astronomical tide from the water surface to the lowest point of the natural sea bed at the location of the primary subsea manifold or the first development well, whichever is the deeper.

Textual Amendments

F10 Ss. 355A-355C inserted (with effect in accordance with art. 8 of the amending S.I.) by The Qualifying Oil Fields Order 2012 (S.I. 2012/3153), arts. 1(1), 5

355B “Large shallow water gas field” U.K.

(1) In this Chapter “large shallow water gas field” means an oil field that meets conditions A to D.

(2) Condition A is that the field was authorised for the first time on or after 25 July 2012.

(3) Condition B is that more than 95% of the reserves of oil which the field has consist of gas.

(4) Condition C is that the depth of the sea above the field is less than 30 metres.

(5) Condition D is that the amount of reserves of gas which the field has, or, where there are one or more oil fields related to the field, the total amount of reserves of gas which the field and those related oil fields together have, is—

(a) 10 billion cubic metres or more, but

(b) less than 25 billion cubic metres.

(6) For the purposes of subsection (5) and section 356(5), an oil field is “related” to another oil field if—

(a) the field meets conditions A to C, and

(b) the authorisation day for each oil field is the same.

(7) For the purposes of this section and section 356(5)—

(a) the amount of reserves of oil which an oil field has is to be determined on the authorisation day,

(b) 1,100 cubic metres of gas at a temperature of 15 degrees celsius and pressure of one atmosphere is to be counted as equivalent to one tonne, and

(c) the depth of the sea above an oil field is to be measured at the lowest astronomical tide from the water surface to the highest point of the natural sea bed at the location of the primary subsea manifold or the first development well, whichever is the shallower.

Textual Amendments

F10 Ss. 355A-355C inserted (with effect in accordance with art. 8 of the amending S.I.) by The Qualifying Oil Fields Order 2012 (S.I. 2012/3153), arts. 1(1), 5

355C “Deep water gas field” U.K.

(1) In this Chapter “deep water gas field” means an oil field that meets conditions A to C.

(2) Condition A is that more than 75% of the reserves of oil which the field has consist of gas.

(3) Condition B is that the depth of the sea above the field is more than 300 metres.

(4) Condition C is that the length of the planned route of the primary pipe-line, or pipe-lines, to be used for transporting gas from the field to the relevant infrastructure is more than 60 kilometres.

(5) For the purposes of subsection (4)—

(a) the length of the planned route is to be determined on the authorisation day,

(b) “pipe-line” has the same meaning as in the Pipe-lines Act 1962 (see section 65 of that Act),

(c) “the relevant infrastructure”, in relation to an oil field, means any pipe-line or gas processing facility which is used by, or is intended to be used by, another oil field whose development was authorised before the authorisation day for the oil field, and

(d) “gas processing facility” has the meaning given by section 90(1) of the Energy Act 2011 .

(6) For the purposes of this section—

(a) the amount of reserves of oil which an oil field has is to be determined on the authorisation day,

(b) 1,100 cubic metres of gas at a temperature of 15 degrees celsius and pressure of one atmosphere is to be counted as equivalent to one tonne, and

(c) the depth of the sea above an oil field is to be measured at the lowest astronomical tide from the water surface to the lowest point of the natural sea bed at the location of the primary subsea manifold or the first development well, whichever is the deeper.]

Textual Amendments

F10 Ss. 355A-355C inserted (with effect in accordance with art. 8 of the amending S.I.) by The Qualifying Oil Fields Order 2012 (S.I. 2012/3153), arts. 1(1), 5

356 “Total field allowance for a new oil field” U.K.

(1) For the purposes of this Chapter, the total field allowance for a new oil field is—

(a) in the case of a small oil field, the amount determined in accordance with subsection (2),

(b) in the case of an ultra heavy oil field, £800,000,000, F11 ...

(c) in the cases of an ultra high pressure/high temperature oil field, [F12 the amount determined in accordance with subsection (3)].

[F13 (d) in the case of a large deep water oil field, the amount determined in accordance with subsection (4),

(e) in the case of a large shallow water gas field, the amount determined in accordance with subsection (5), and

(f) in the case of a deep water gas field, the amount determined in accordance with subsection (6).]

[F14 (2) The total field allowance for a small oil field is—

(a) if the field has reserves of oil of 6,250,000 tonnes or less, £150,000,000, and

(b) in any other case (where the oil field has reserves of more than 6,250,000 tonnes but not more than 7,000,000 tonnes) the following amount—

where X is the amount of the reserves of oil (in tonnes) which the field has.]

[F15 (3) The total field allowance for an ultra high pressure/high temperature oil field is—

(a) £800,000,000, if the temperature of oil in the reservoir formation is more than 176.67 degrees celsius, and

(b) if the temperature of oil in the reservoir formation is more than 166 degrees celsius but not more than 176.67 degrees celsius, the sum of £500,000,000 and an amount calculated as follows—

where X is the number of complete hundredths of a degree celsius by which the temperature of oil in the reservoir formation exceeds 166 degrees celsius.]

[F16 (4) The total field allowance for a large deep water oil field is —

• where X is—

  (a)

  in a case where the amount of the reserves of oil which the field has is 40,000,000 tonnes or less, 40,000,000,

  (b)

  in any other case (where the oil field has reserves of more than 40,000,000 tonnes but not more than 55,000,000 tonnes) the amount of the reserves of oil (in tonnes) which the field has.

(5) The total field allowance for a large shallow water gas field is—

• where—

  • R is the amount of the reserves of gas (in billion cubic metres) which the field has,

  • T is—

    • the amount of the reserves of gas (in billion cubic metres) which the field has, or

    • in a case where there are one or more oil fields related to the field, the total amount of reserves of gas (in billion cubic metres) which the field and those related oil fields together have, and

  • X is—

    • in a case where T is 20 or less, 20, and

    • in any other case (where T is greater than 20 but less than 25), T.

(6) The total field allowance for a deep water gas field is—

• where—

  • Y is—

a)

£800,000,000, or

b)

in a case where two or more deep water gas fields share the same authorisation day, £1,600,000,000 divided by the total number of those deep water gas fields, and

• D is—

a)

where the length of the planned pipe-line route is more than 60 but less than 120 kilometres, that length (in kilometres), or

b)

in a case where the length of the planned pipe-line route is 120 kilometres or more, 120.

(7) In subsection (6) “the planned pipe-line route”, in relation to a deep water gas field, means the planned route of the pipe-line (or pipe-lines) to be used for transporting gas from the field as mentioned in section 355C(4).

(8) If an oil field falls within more than one of the descriptions of oil field listed in section 352 (“qualifying oil field”), then for the purposes of this section the field is to be regarded as being of the description that produces the greatest total field allowance for that field.]

Textual Amendments

F11 Word in s. 356(1)(b) omitted (with effect in accordance with art. 8 of the amending S.I.) by virtue of The Qualifying Oil Fields Order 2012 (S.I. 2012/3153), arts. 1(1), 6(2)

F12 Words in s. 356(1)(c) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Qualifying Oil Fields Order 2010 (S.I. 2010/1899), arts. 1(2), 4(2)

F13 S. 356(1)(d)-(f) inserted (with effect in accordance with art. 8 of the amending S.I.) by The Qualifying Oil Fields Order 2012 (S.I. 2012/3153), arts. 1(1), 6(2)

F14 S. 356(2) substituted (with effect in accordance with art. 8 of the amending S.I.) by The Qualifying Oil Fields Order 2012 (S.I. 2012/3153), arts. 1(1), 6(3)

F15 S. 356(3) inserted (with effect in accordance with art. 1(2) of the amending S.I.) by The Qualifying Oil Fields Order 2010 (S.I. 2010/1899), arts. 1(2), 4(3)

F16 S. 356(4)-(8) inserted (with effect in accordance with art. 8 of the amending S.I.) by The Qualifying Oil Fields Order 2012 (S.I. 2012/3153), arts. 1(1), 6(4)

[F17 356A “Total field allowance for an additionally-developed oil field” U.K.

(1) For the purposes of this Chapter, the total field allowance for an additionally-developed oil field in relation to which a qualifying project has been authorised as mentioned in section 349A(1)(a) is—

(a) if the field is not a cross-boundary field, the amount determined in accordance with subsection (2), and

(b) if the field is a cross-boundary field, the amount determined in accordance with subsection (3).

This is subject to subsections (4) and (7).

(2) In a case where the field is not a cross-boundary field, the total field allowance for the field is—

where—

• AR is the amount of additional reserves of oil (in tonnes) which the field has as a result of the project, and

• CPT is—

  (a)

  where the cost per tonne of the project is £80 or more, £80, and

  (b)

  in any other case (where the cost per tonne of the project is less than £80 but more than £60), the cost per tonne of the project (expressed in pounds).

(3) In a case where the field is a cross-boundary field, the total field allowance for the field is—

where—

• A is the amount that would be determined in accordance with subsection (2) as the total field allowance for the field if it were not a cross-boundary field, and

• UKR is the fraction of the reserves of oil which the field has lying within the UK marine area.

(4) The total field allowance for an additionally-developed oil field may not exceed the relevant maximum (see subsection (5)).

(5) The relevant maximum is—

(a) in the case of a licensee in the field who is liable to PRT, £500,000,000, and

(b) in any other case, £250,000,000.

(6) For the purposes of subsection (5) a licensee in an oil field in relation to which a qualifying project has been authorised as mentioned in section 349A(1)(a) is “liable to PRT” if—

(a) it is reasonably expected, as at the authorisation day, that the licensee will be chargeable with petroleum revenue tax for a chargeable period in respect of its share of the equity in the field, and

(b) the chargeable period is one in which oil is reasonably expected, as at the authorisation day, to be won from the field as a result of the project.

(7) In a case where—

(a) the field is not the only additionally-developed oil field that has additional reserves of oil as a result of the project, and

(b) the sum of the amounts determined in accordance with subsection (2) or (3) (as the case may be) in relation to each of those oil fields is greater than the relevant maximum (see subsection (5)),

the total field allowance for the field is the relevant percentage of the amount determined in accordance with subsection (2) or (3) (as the case may be) in relation to the field.

(8) The relevant percentage is—

where—

• RM is the relevant maximum, and

• T is the sum of the amounts determined in accordance with subsection (2) or (3) (as the case may be) in relation to each of the additionally-developed oil fields that has additional reserves of oil as a result of the project.

(9) For the purposes of this section—

(a) 1,100 cubic metres of gas at a temperature of 15 degrees celsius and pressure of one atmosphere is to be counted as equivalent to one tonne,

(b) “cost per tonne”, in relation to a project, has the same meaning as in article 2 of the Additionally-developed Oil Fields Order 2013,

(c) “cross-boundary field” has the meaning given by section 10(9) of the Petroleum Act 1998,

(d) “qualifying project” means a project meeting the conditions in subsection (1)(aa) and (b) of section 349A, and

(e) “UK marine area” has the same meaning as in the Marine and Coastal Access Act 2009 (see section 42 of that Act).]

Textual Amendments

F17 S. 356A inserted (retrospective to 1.4.2013) by The Additionally-developed Oil Fields Order 2013 (S.I. 2013/2910), arts. 1(1), 10

357 Other definitions U.K.

[F18 (1)] In this Chapter—

• “adjusted ring fence profits”, in relation to a company and an accounting period, means the adjusted ring fence profits that would (if this Chapter were ignored) be taken into account in calculating the supplementary charge on the company under section 330(1) for the accounting period,

• [F19 “authorisation day” means—

  (a)

  [F20 in relation to an additionally-developed oil field and a project authorised in relation to the field as mentioned in section 349A(1)(a), the day when the project is so authorised,]

  (b)

  in relation to a new oil field, the day when development of the field is authorised as mentioned in section 350(1)(b),]

• [F21 “eligible oil field” means an oil field which is an additionally-developed oil field or a new oil field,]

• F22 ...

• “licensee” has the same meaning as in Part 1 of OTA 1975, and

• “relevant income”, in relation to [F23 an eligible oil field] and an accounting period of a company, means production income of the company from any oil extraction activities carried on in the field that is taken into account in calculating the company's adjusted ring fence profits for the accounting period.

[F24 (2) Any reference in this Chapter to a share of the equity in an oil field (other than the reference in section 356A(6)) is, in the case of an additionally-developed oil field and a project authorised in relation to the field as mentioned in section 349A(1)(a), to be read as a reference to a share of the additional reserves of oil which the field has as a result of the project.]

Textual Amendments

F18 S. 357(1): renumbered (retrospective to 1.4.2013) by The Additionally-developed Oil Fields Order 2013 (S.I. 2013/2910), arts. 1(1), 11(2)

F19 Words in s. 357(1) substituted (1.4.2013) by Finance Act 2012 (c. 14), Sch. 22 paras. 16(2), 21(2); S.I. 2013/744, art. 2

F20 Words in s. 357(1) substituted (retrospective to 1.4.2013) by The Additionally-developed Oil Fields Order 2013 (S.I. 2013/2910), arts. 1(1), 11(3)

F21 Words in s. 357 inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 22 paras. 16(3), 21(2)

F22 Words in s. 357(1) omitted (1.4.2013) by virtue of Finance Act 2012 (c. 14), Sch. 22 paras. 16(4), 21(2); S.I. 2013/744, art. 2

F23 Words in s. 357 substituted (1.4.2013) by Finance Act 2012 (c. 14), Sch. 22 paras. 16(5), 21(2); S.I. 2013/744, art. 2

F24 S. 357(2) inserted (retrospective to 1.4.2013) by The Additionally-developed Oil Fields Order 2013 (S.I. 2013/2910), arts. 1(1), 11(4)