Part 8

Oil activities
Chapter 4

Calculation of profits

Oil valuation

Valuation where appropriation to refining etc
285
1
This section applies if conditions A, B and C are met.
2
Condition A is that a company appropriates oil acquired by it—
a
in the course of oil extraction activities carried on by it, or
b
as a result of oil rights held by it.
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 284 does not apply in relation to the appropriation.
5
For the purposes of the charge to corporation tax on income—
a
the company is to be treated as having, at the time of the appropriation, sold and purchased the oil as mentioned in section 284(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.