http://www.legislation.gov.uk/ukpga/1975/22/section/5Oil Taxation Act 1975An Act to impose a new tax in respect of profits from substances won or capable of being won under the authority of licences granted under the Petroleum (Production) Act 1934 or the Petroleum (Production) Act (Northern Ireland) 1964; to make in the law relating to income tax and corporation tax amendments connected with such substances or with petroleum companies; and for connected purposes.1990-03-01texttext/xmlenStatute Law Database2024-06-19Expert Participation2019-02-12 PART I51Subject to the following provisions of this section and Schedule 7 to this Act, the abortive exploration expenditure allowable in the case of a person who is a participator in an oil field is any expenditure (whether or not of a capital nature) incurred on or after 1st January 1960 and before 16th March 1983 which—awas incurred by that person or, if that person is a company, by that company or a company associated with it in respect of the expenditure; andbwas incurred wholly and exclusively for the purpose of searching for oil in the United Kingdom, the territorial sea thereof or a designated area; andcis not, and is unlikely to become, allowable under section 3 or 4 of this Act for any oil field,but so that any expenditure to which subsection (2) below applies shall not be allowable under this section except to the extent that it falls by virtue of that subsection to be treated as incurred wholly and exclusively for the purpose mentioned in paragraph (b) above.2Where any person has incurred expenditure in acquiring, bringing into existence, or enhancing the value of an asset which is subsequently used by him for the purpose mentioned in paragraph (b) of subsection (1) above, then—asubject to paragraph (b) below, if the useful life of the asset continues after the end of the twelve months beginning with the day on which he acquired the asset or brought it into existence, he shall be treated for the purposes of that subsection as having incurred wholly and exclusively for that purpose a fraction of that expenditure on each day after the expenditure was incurred on which the asset is used by him wholly and exclusively for that purpose, and that fraction is the fraction of which the numerator is 1 and the denominator is the number of days in the period beginning with the day on which he incurred that expenditure and ending with the day on which the asset’s useful life is reasonably likely to end;bif a subsequent disposal of the asset by that person otherwise than to a person connected with him gives rise to the receipt of a sum that falls to be taken into account under subsection (6) below, being a sum not less than the price which the asset might reasonably have been expected to fetch if sold in the open market at the time of the disposal, paragraph (a) above shall apply with the substitution, for the reference to the day on which the asset’s useful life is reasonably likely to end, of a reference to the day on which the disposal was made.Section 4(13) of this Act applies to the preceding provisions of this subsection.2AFor the purpose only of determining under paragraph (c) of subsection (1) above whether expenditure is or is likely to become allowable for any oil field, it shall be assumed that any oil field which, apart from this subsection, would be a non-taxable field is or, as the case may be, will be a taxable field and, accordingly, that section 185(4)(e) of the Finance Act 1993 (no expenditure allowable for non-taxable fields) does not apply.3Expenditure is not allowable under this section in connection with an oil field if, or to the extent that, it has been allowed under Schedule 7 to this Act in connection with any oil field.4Subsection (4) of section 3 of this Act shall apply for the purposes of this section with the following modifications, that is to say—ain paragraph (c) the words from “except” to the end of sub-paragraph (iii) shall be omitted;bparagraph (d) shall be omitted;cin paragraph (e), the reference to oil won or to be won from the field shall be read as a reference to oil won or to be won from any area whatsoever.5Paragraph 2 of Schedule 4 to this Act shall, . . . , apply in relation to this section as it applies in relation to sections 3 and 4 of this Act.6Where any expenditure which would otherwise be allowable under this section gives rise to the receipt of any sum (whether or not of a capital nature) by the person who incurred the expenditure or any person connected with him, that expenditure shall for the purposes of this section be reduced by an amount equal to that sum.7For the purposes of this section—a“company” means any body corporate;b section 1122 of CTA 2010 (connected persons) shall apply; andca company which is a participator in an oil field is associated with another company in respect of expenditure incurred by the other company if—ithroughout that part of the relevant period in which both were in existence one was a 51 per cent. subsidiary of the other and the other was not a 51 per cent. subsidiary of any company; oriieach of them was, throughout that part of the relevant period in which it was in existence, a 51 per cent. subsidiary of a third company which was not itself a 51 per cent. subsidiary of any company.8For the purposes of subsection (7)(c) above—a“the relevant period” is the period beginning immediately before the expenditure was incurred and ending with the end of whichever of the following periods ends later, that is to say—ithe earliest chargeable period in which the company which is a participator in the oil field in question was a participator in that field; andiithe chargeable period (for that field) in which the expenditure was incurred,(or, if they are the same period, with the end of that period); andb Chapter 3 of Part 24 of CTA 2010 (subsidiaries) shall apply.See Finance Act 1980 (c. 48), s. 106 and Sch. 17See Finance Act 1984 (c. 43), s. 113Words inserted by Finance Act 1983 (c. 49), s. 37(2) and Sch. 8 Part II para. 3See Oil Taxation Act 1983 (c. 56), s. 3(6)S. 5(2A) inserted (1994.05.03) by 1994 c. 9, s. 237(1)Words repealed by Finance Act 1980 (c. 48), s. 122 and Sch. 20 Part XIIISee Finance Act 1983 (c. 49), s. 37(3) and Sch. 8 Part III with respect to sums received after 15 March 1983Pts. I III modified by Oil Taxation Act 1983 (c. 56), s. 6A (as inserted (22.7.2004) by Finance Act 2004 (c. 12), s. 285(3))Pt. I construed as one with the following enactments: Finance Act 1986 (c. 41), s. 109 (see s 109(6)); Advance Petroleum Revenue Tax Act 1986 (c. 68, SIF 63:1) (see s. 2(2)); Finance (No. 2) Act 1992 (c. 48), s. 74 (by s. 74(6)); Finance Act 1993, Pt. III (other than s. 194) (see s. 195(3)); Finance Act 1994 (c. 9), Pt. V (see s. 257(2)); Finance Act 1999 (c. 16), ss. 95-98 (see ss. 97(7), 98(7)); Finance Act 2001 (c. 9), Sch. 32 (see s. 101(4)(5), Sch. 32 para. 11) Pt I applied (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 199(7)(c), 276(5), 289 (with ss. 60, 101(1), 171, 201(3)).Words in s. 5(7)(b) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 162(2) (with Sch. 2)Words in s. 5(8)(b) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 162(3) (with Sch. 2)