Finance Act 1984

113 Restriction on PRT reliefs.U.K.

(1)Subject to subsection (3) below, in determining whether any . . . F1 expenditure is allowable in the case of a participator in an oil field under section 5 or section 5A [F2or section 5B] of the principal Act, no account shall be taken of any expenditure incurred before his qualifying date.

(2)Subject to subsection (3) below, in determining whether any unrelievable field losses are allowable in the case of a participator in an oil field under section 6 of that Act, no account shall be taken of any allowable loss [F3falling within subsection (1B)] of that section unless the date on which the winning of oil [F3from the abandoned field] permanently ceased fell on or after his qualifying date.

(3)Subsections (1) and (2) above do not apply in the case of a participator in an oil field if his qualifying date falls before 14th September 1983 or before the end of the first chargeable period in relation to the field.

(4)In this section “qualifying date”, in relation to a participator in an oil field, means [F4(subject to subsection (6) below)]whichever of the following dates is applicable in his case or (if there is more than one) the earliest of them—

(a)the date on which the participator first qualified in respect of any licensed area, being an area which is wholly or partly included in the field;

(b)if the participator is a company, the date on which another company first satisfied both of the following conditions, that is to say—

(i)it qualified in respect of any licensed area, being an area which is wholly or partly included in the field; and

(ii)it was connected with the participator; and

(c)if he is a participator in the field by reason of an arrangement between him and another company, being an arrangement to which paragraph 5 of Schedule 3 to the principal Act applies (transfer of rights etc. to associated company), the date on which the arrangement was made or, if later, the date on which that other company first qualified in respect of any licensed area, being an area which is wholly or partly included in the field.

(5)For the purposes of subsection (4) above, a person qualifies in respect of a licensed area when, in respect of that area—

(a)he is, or is one of those, entitled to the benefit of a licence, or

(b)he enjoys rights under an agreement, being an agreement which has been approved by the Board and certified by the [F5OGA] to confer on him rights which are the same as, or similar to, those conferred by a licence.

(6)Where (apart from this section) expenditure would be allowable under section 5 or section 5A [F6or section 5B] of the principal Act in the case of a participator in an oil field (in this subsection referred to as “the new participator") by virtue only of [F7paragraphs 16 to 16B] of Schedule 17 to the Finance Act 1980 (transfers of interests in oil fields) then, for the purpose of determining whether the expenditure is allowable in his case in accordance with this section, the date which was the qualifying date in relation to the old participator (within the meaning of that Schedule) [F8, rather than the date given by subsection (4) above, shall be taken to be the qualifying date in relation to the new participator.].

(7)For the purposes of subsection (2) above the date on which the winning of oil from an oil field has permanently ceased is the date stated in a decision (whether of the Board or on appeal from the Board) under Schedule 8 to the principal Act to be that date.

(8)For the purposes of this section, one company is connected with another if—

(a)one is a 51 per cent. subsidiary of the other and the other is not a 51 per cent. subsidiary of any company; or

(b)each of them is a 51 per cent. subsidiary of a third company which is not itself a 51 per cent. subsidiary of any company; and section [F9Chapter 3 of Part 24 of the Corporation Tax Act 2010] (subsidiaries) applies for the purposes of this subsection.

(9)In this section—

(a)“company” means any body corporate; and

(b)any reference to the winning of oil from an oil field permanently ceasing includes a reference to the permanent cessation of operations for the winning of oil from the field.

(10)This section shall have effect in relation to any expenditure or losses in respect of which a claim is made after 13th September 1983.