Part 2

Trading income
Chapter 16A

Oil activities

Oil valuation

Valuation where appropriation to refining etc
225J
1
This section applies if conditions A, B and C are met.
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.
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.
5
For income tax purposes—
a
the person is to be treated as having, at the time of the appropriation, sold and purchased the oil as mentioned in section 225I(4)(a) and (b), and
b
that sale and purchase is to be treated as having been at a price 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 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 appropriated as mentioned in this section,
b
any reference in paragraphs 2 and 2A to oil being relevantly appropriated is to be read as a reference to its being appropriated as mentioned in this section, and
c
paragraph 2(4) is to be treated as omitted.
Pt. 2 Ch. 16A inserted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 1 para. 2 (with Sch. 9 paras. 1-9, 22)