Part 8Oil activities
Chapter 7Reduction of supplementary charge for certain new oil fields
Change in equity share: activation of allowance
342Introduction to sections 343 and 344
1
Sections 343 and 344 apply to a company in respect of a new oil field and an accounting period if the following conditions are met.
2
Condition A is that the company is a licensee in the field for the whole, or for part, of the accounting period.
3
Condition B is that the company's share of the equity in the field is different at different times during the accounting period.
4
Condition C is that the company holds an unactivated amount of field allowance for the field at any time during the accounting period.
5
Condition D is that the company has relevant income from the field in the accounting period.
6
In a case where a company has three or more different shares of the equity in a new oil field during a particular day, sections 343 and 344 (in particular provisions relating to the beginning or end of a day) have effect subject to the necessary modifications.
343Reference periods
1
For the purposes of section 344, the accounting period, or (if the company is not a licensee for the whole of the accounting period) the part or parts of the accounting period for which the company is a licensee, is to be divided into reference periods.
2
A reference period is a period of consecutive days that meets the following conditions.
3
Condition A is that, at the beginning of each day in the period, the company is a licensee in the new oil field.
4
Condition B is that, at the beginning of each day in the period, the company's share of the equity in the field is the same.
5
Condition C is that, at the beginning of the first day of the period, the company holds an unactivated amount of field allowance for the field.
6
Condition D is that each day in the period falls within the accounting period.
344Activation of field allowance
1
An amount of the company's field allowance for the new oil field is to be activated in respect of each reference period.
2
The amount of the field allowance to be activated is the smallest of the following amounts—
a
the relevant activation limit,
b
the company's relevant income from the field in the reference period, and
c
the unactivated amount of the field allowance which the company holds at the beginning of the reference period.
3
The relevant activation limit is—
where—
T is the amount of the total field allowance for the field (see section 356),
E is the company's share of the equity in the field during the reference period, and
R is the number of days in the reference period.
4
The company's relevant income from the field in the reference period is—
where—
I is the company's relevant income from the field in the whole of the accounting period,
R is the number of days in the reference period, and
L is the number of days in the accounting period for which the company is a licensee in the new oil field.