Part 8

Oil activities
Chapter 4

Calculation of profits

Oil valuation

Valuation where relevant appropriation but no disposal
284
1
This section applies if conditions A and B are met.
2
Condition A is that a company makes a relevant appropriation of oil without disposing of it.
3
Condition B is that the company does so in circumstances such that the market value of the oil—
a
falls to be taken into account under section 2 of OTA 1975 in calculating for petroleum revenue tax purposes the assessable profit or allowable loss accruing to it in a chargeable period from an oil field, or
b
would so fall but for section 10 of that Act.
4
For the purposes of the charge to corporation tax on income, the company is to be treated as having, at the time of the appropriation—
a
sold the oil in the course of the separate trade consisting of activities falling within the definition of “oil-related activities” in section 274, and
b
purchased it in the course of the separate trade consisting of activities not so falling.
5
For those purposes, that sale and purchase is to be treated as having been at a price equal to the market value of the oil—
a
as so taken into account under section 2 of OTA 1975, or
b
as would have been so taken into account under that section but for section 10 of that Act.
6
In this section “relevant appropriation” has the meaning given by section 12(1) of OTA 1975.