Oil Taxation Act 1975

Section 1.

SCHEDULE 2U.K. Management and Collection of Petroleum Revenue Tax

Management of taxU.K.

1(1)The tax shall be under the care and management of the Board; and the provisions of the M1Taxes Management Act 1970 specified in the first column of the following Table shall apply in relation to the tax as they apply in relation to a tax within the meaning of that Act, subject to any modifications specified in the second column of that Table and with the substitution, for references to Part IX of that Act or to the Taxes Acts, of references to this Part of this Act and, for references to chargeable periods within the meaning of that Act, of references to chargeable periods within the meaning of this Part of this Act.U.K.

(2)Any expression to which a meaning is given in this Part of this Act which is used in a provision of the M3Taxes Management Act 1970 applied by this paragraph shall, in that provision as so applied, have the same meaning as in this Part of this Act.

Returns by participatorsU.K.

2(1)Every participator in [F10a taxable field] shall, for each chargeable period, prepare and, within two months after the end of the period [F11or within such longer period as the Board may allow], deliver to the Board a return complying with the following provisions of this paragraph; but nothing in this sub-paragraph shall require a participator to deliver a return under this paragraph before 31st August 1975.U.K.

(2)A return under this paragraph for a chargeable period shall give the following information in relation to oil which is or was included in the participator’s share of any oil won from [F10the taxable field] (whether or not in that period), that is to say—

(a)in the case of each delivery (other than one made before 13th November 1974) in the period of oil disposed of by him crude (other than oil delivered as mentioned in (c) of this sub-paragraph), the return shall—

(i)state the quantity of oil delivered;

(ii)state the person to whom the oil was disposed of;

(iii)in the case of oil disposed of in a sale at arm’s length, state the price received or receivable for the oil or, in the case of oil disposed of otherwise than in a sale at arm’s length, state the market value of the oil [F12at the material time] [F13as determined in accordance with Schedule 3 to this Act in the case of the delivery] [F14or (in the case of light gases) the market value as determined in accordance with paragraph 3A of Schedule 3 to this Act]; and

(iv)contain such other particulars of or relating to the disposal as the Board may prescribe;

(b)in the case of each relevant appropriation of crude oil (other than one made before 13th November 1974) in the period (not being oil disposed of by him), the return shall—

(i)state the quantity of oil appropriated;

(ii)state the market value of the oil [F12at the material time] [F15as determined in accordance with Schedule 3 to this Act in the case of the appropriation] [F16or (in the case of light gases) the market value as determined in accordance with paragraph 3A of Schedule 3 to this Act]; and

(iii)contain such other particulars of or relating to the appropriation as the Board may prescribe;

(c)in the case of crude oil delivered to the Secretary of State in the period under the terms of a licence granted under [F17Part I of the Petroleum Act 1998], the return shall state the total quantity of the oil;

(d)in the case of crude oil which, at the end of the period, has either not been disposed of and not relevantly appropriated or has been disposed of but not delivered, the return shall—

(i)state the quantity of the oil;

(ii)state the market value of the oil [F18on the last business day] of the period; and

(iii)contain such other particulars relating to the oil as the Board may prescribe.

[F19(2A)Every participator in [F10a taxable field] shall, in the first return under this paragraph which he makes for that field, state whether any and, if any, how much [F20expenditure to which section 5A or section 5B] of this Act applies and which relates to, or to a licence for, any part of the field has been claimed under Schedule 7 to this Act—

(a)by him, or

(b)by a company associated with him in respect of that expenditure, or

(c)if he or such a company is the new participator, within the meaning of Schedule 17 to the Finance Act 1980, by the old participator, within the meaning of that Schedule, or by a company associated with him in respect of that expenditure,

and subsection (7) of section 5 of this Act applies for the purposes of this sub-paragraph as it applies for the purposes of that section.]

(3)A return under this paragraph for a chargeable period shall state—

(a)the amount of royalty payable by the participator for that period in respect of his share of oil won from the field as shown in the return or returns made by him to the Secretary of State under the relevant licence or licences;

(b)the amount of royalty paid by the participator in that period in respect of that share;

(c)the amount of any royalty paid under any relevant licence in respect of the field which was repaid to the participator in that period; and

(d)the amount of any periodic payment made by the participator to the Secretary of State in that period under each relevant licence otherwise than by way of royalty.

[F21(3A)A return under this paragraph for a chargeable period shall—

(a)state the amount (if any) which, in the case of the participator, is to be brought into account for that period in accordance with section 2(5)(e) of this Act;

(b)contain such particulars as the Board may prescribe (whether before or after the passing of the Finance Act 1987) with respect to any nominated transaction under Schedule 10 to that Act—

(i)the effective volume of which forms part of the participator’s aggregate effective volume (construing those terms in accordance with that Schedule) for any calendar month comprised in that chargeable period; and

(ii)which has not led to deliveries of oil or relevant appropriations of which particulars are included in the return by virtue of sub-paragraph (2) above; and

(c)contain such other particulars as the Board may prescribe (as mentioned above) in connection with the application of section 61 of and Schedule 10 to the Finance Act 1987.]

(4)A return under this paragraph shall be in such form as the Board may prescribe and shall include a declaration that the return is correct and complete.

[F22(5)The power of the Board to allow an extension of time under sub-paragraph (1) above shall include power—

(a)to allow an extension for an indefinite period; and

(b)to provide for the period of any extension to end at such time as may be stipulated in a notice given by the Board.]

3(1)If a participator fails to deliver a return within the time allowed for doing so under paragraph 2(1) above he shall be liable, subject to sub-paragraph (3) below—U.K.

(a)to a penalty not exceeding, except in the case mentioned in sub-paragraph (2) below, £500; and

(b)if the failure continues after it has been declared by the court or the Commissioners before whom proceedings for the penalty have been commenced, to a further penalty not exceeding £100 for each day on which the failure so continues.

(2)If the failure continues after the end of six months from the time by which the return ought to have been delivered, the penalty under sub-paragraph (1)(a) above shall be an amount not exceeding the aggregate of £500 and the total amount of the tax with which the participator is charged for the chargeable period in question.

(3)Except in the case mentioned in sub-paragraph (2) above, the participator shall not be liable to any penalty incurred under this paragraph for failure to deliver a return if the failure is remedied before proceedings for the recovery of the penalty are commenced.

Appointment of responsible person for each oil fieldU.K.

4(1)For each oil field a body corporate or partnership shall be appointed in accordance with this paragraph as the responsible person for that field to perform, in relation to the field, any functions conferred on it as such by this Part of this Act; and the body or partnership which for the time being holds that appointment is in this Part of this Act referred to as “the responsible person”.U.K.

(2)No body corporate shall be eligible for appointment as the responsible person for [F23a taxable field] unless it is resident in the United Kingdom, and no partnership shall be so eligible unless all its members are resident there.

(3)The participators in [F23a taxable field] shall, by notice in writing to the Board within the initial period, nominate a body corporate or a partnership for appointment as the responsible person for that oil field and, if the Board approve the nomination, the Board shall appoint that body or partnership as the responsible person and give it notice that it has been so appointed.

(4)If—

(a)the participators have made no nomination within the initial period; or

(b)the Board do not appoint the body or partnership nominated under sub-paragraph (3) above,

the Board shall appoint one of the participators in [F23the taxable field] as the responsible person for the field and shall give notice to that participator that he has been so appointed.

(5)For the purposes of the preceding provisions of this paragraph, the initial period is the period of thirty days beginning with the latest date on which notice of determination of [F23the taxable field] is given to any of the participators under paragraph 4 of Schedule 1 to this Act.

(6)The Board may at any time, on the application of all the participators in [F23a taxable field], appoint a body corporate or partnership nominated by the participators as the responsible person for that field in place of the body corporate or partnership which is the responsible person at that time, and shall give the body or partnership so appointed notice that it has been so appointed.

(7)The Board may, by notice in writing to the body corporate or partnership which is for the time being the responsible person for [F23a taxable field], revoke the appointment of that body or partnership as the responsible person for that field; and where they do so the Board shall appoint one of the participators in [F23the taxable field] as the responsible person for that field and shall give notice to the participator that he has been so appointed.

(8)In this paragraph “participator”, in relation to [F23a taxable field], means a person who is a licensee in respect of any licensed area wholly or partly included in the field.

Returns by the responsible personU.K.

5(1)The responsible person for [F24a taxable field]shall, for each chargeable period, prepare and, within one month after the end of the period [F25or within such longer period as the Board may allow], deliver to the Board a return for that period complying with sub-paragraphs (2) and (3) below; but nothing in this sub-paragraph shall require the responsible person to deliver a return under this paragraph before 31st July 1975.U.K.

(2)A return under this paragraph for a chargeable period shall—

(a)state the quantity of oil won and saved from [F24the taxable field] during the period;

(b)state the respective interests of the participators in the field in that oil;

(c)state what, in accordance with those interests, is each participator’s share of that oil; and

(d)contain such other particulars of or relating to the field as the Board may require.

[F26(2A)The reference in sub-paragraph (2)(d) above to particulars of or relating to the field includes a reference to particulars required for determining the amount by which any qualifying tariff receipts, within the meaning of section 9 of the Oil Taxation Act 1983, are to be treated as reduced by virtue of that section.]

[F27(2B)If in any chargeable period oil won from [F24the taxable field] is mixed as mentioned in section 63 of the Finance Act 1987 so as to give rise to blended oil, within the meaning of that section, then, as respects that chargeable period, for paragraph (a) of sub-paragraph (2) above there shall be substituted the following paragraph—

“(a)state the total of the shares of the participators in [F24the taxable field] of the oil won from the field during the period less so much of the oil won from the field as is not saved”.]

(3)A return under this paragraph shall be in such form as the Board may prescribe and shall include a declaration that the return is correct and complete.

[F28(4)The power of the Board to allow an extension of time under sub-paragraph (1) above shall include power—

(a)to allow an extension for an indefinite period; and

(b)to provide for the period of any extension to end at such time as may be stipulated in a notice given by the Board.]

6(1)If the responsible person fails to deliver a return within the time allowed for doing so under paragraph 5(1) above he shall be liable—U.K.

(a)to a penalty not exceeding £500, and

(b)if the failure continues after it has been declared by the court or Commissioners before whom proceedings for the penalty have been commenced, to a further penalty not exceeding £100 for each day on which the failure so continues.

(2)The responsible person shall not be liable to any penalty incurred under sub-paragraph (1) above for failure to deliver a return if the failure is remedied before proceedings for the recovery of the penalty are commenced.

Production of accounts, books and other informationU.K.

F297U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Incorrect returns, accounts, etc.U.K.

8(1)Where a participator in [F30a taxable field] fraudulently or negligently—U.K.

(a)delivers an incorrect return under paragraph 2 above; or

(b)makes any incorrect statement or declaration in connection with any claim under this Part of this Act for the allowance of any expenditure or for any relief in respect of the tax; or

(c)submits to the Board or the Special Commissioners any incorrect accounts in connection with the ascertainment of the participator’s liability to the tax,

the participator shall be liable to a penalty not exceeding the aggregate of—

(i)£50, and

(ii)the amount or, in the case of fraud, twice the amount, of the difference specified in sub-paragraph (2) below.

(2)The difference is that between—

(a)the amount of tax payable by the participator—

(i)for the chargeable period to which the return relates; or

(ii)for the next chargeable period ending after the allowance of the claim; or

(iii)for the chargeable period or periods against which the relief is claimed; or

(iv)for the chargeable period or periods for which the accounts are relevant,

as the case may be; and

(b)the amount which would have been the amount so payable if the return, statement, declaration or accounts as made or submitted by him had been correct.

(3)Where the responsible person for [F30a taxable field] fraudulently or negligently—

(a)delivers an incorrect return under paragraph 5 above; or

(b)makes any incorrect statement or declaration in connection with any claim under this Part of this Act for the allowance of any expenditure,

the responsible person shall be liable to a penalty not exceeding £2,500 or, in the case of fraud on his part, £5,000.

9(1)Where any such return, statement, declaration or accounts as are mentioned in paragraph 8 above were made or submitted by any person neither fraudulently nor negligently and it comes to his notice that they were incorrect, then, unless the error is remedied without unreasonable delay, the return, statement, declaration or accounts shall be treated as having been negligently made or submitted by the first-mentioned person.U.K.

(2)Where any such return, statement, declaration or accounts were made or submitted by the responsible person for [F31a taxable field] neither fraudulently nor negligently and it comes to the notice of any person who subsequently becomes the responsible person for that field that they were incorrect, then, unless the error is remedied without unreasonable delay, the return, statement, declaration or accounts shall be treated as having been negligently made or submitted by the responsible person to whose notice the incorrectness came.

(3)For the purposes of paragraph 8 above, any accounts submitted on behalf of any person shall be deemed to have been submitted by that person unless he proves that they were submitted without his consent or connivance.

Assessments to tax and determinations of loss, etc.U.K.

10(1)Where it appears to the Board that, in accordance with the provisions of this Part of this Act, an assessable profit has accrued to a participator in a chargeable period from [F32a taxable field], they shall make an assessment to tax on the participator and shall give him notice of the assessment.U.K.

(2)Where it appears to the Board that, in accordance with those provisions, an allowable loss has accrued to a participator in a chargeable period from [F32a taxable field], they shall make a determination that the loss is allowable to the participator and shall give him notice of the determination.

(3)Where it appears to the Board that, in accordance with those provisions, neither an assessable profit nor an allowable loss has accrued to a participator in a chargeable period, they shall make a determination to that effect and shall give him notice of the determination.

(4)A notice of assessment for a chargeable period shall state the amount of any allowable losses which, in accordance with those provisions, have been set against the assessable profit for that period.

(5)A notice of assessment or determination shall state that the participator may appeal against the assessment or determination in accordance with paragraph 14 below.

(6)After the service of the notice of assessment or the notice of determination the assessment or determination, as the case may be, shall not be altered except in accordance with the express provisions of this Part of this Act (including the provisions applied by paragraph 1 above).

11(1)Where a participator has under paragraph 2 above delivered to the Board a return for a chargeable period and the Board are satisfied that the information given in the return is correct in so far as it is material for the purpose of computing his assessable profit or allowable loss (if any) for that period, the Board shall (in so far as the computation falls to be made by reference to the matters dealt with in the return) make the assessment or determination under paragraph 10 above in accordance with the return.U.K.

(2)Where the Board are not so satisfied in relation to a participator’s return or a participator fails to deliver to the Board a return for a chargeable period as required by paragraph 2 above, the Board shall, in so far as the computation of his assessable profit or allowable loss (if any) for that period falls to be made by reference to the matters which were dealt with in the return or, as the case may be, ought to have been dealt with in a return, make the assessment or determination under paragraph 10 above to the best of their judgment.

(3)Nothing in sub-paragraph (2) above or in paragraph 5 above shall be taken, in a case where the participator has delivered a return as to which the Board are not satisfied as mentioned in sub-paragraph (1) above, to prevent the Board from basing their assessment or determination on the participator’s having had an interest in oil won and saved from the field different from that on which he based his return.

12(1)Where it appears to the Board—U.K.

(a)that the assessable profit charged to tax by or stated in an assessment ought to be or to have been larger or smaller; or

(b)that the allowable loss stated in an assessment or a determination of loss ought to be or to have been larger or smaller; or

(c)that, where they made a determination that neither an assessable profit nor an allowable loss accrued in a chargeable period, they ought to have made an assessment to tax or a determination of loss for that period, [F33or]

[F34(d)that for any chargeable period they ought to have made an assessment to tax instead of a determination of loss or a determination of loss instead of an assessment to tax];

the Board may make such assessments or determinations or such amendments of assessments or determinations as may be necessary; and where the Board exercise any of their powers under this paragraph in relation to a chargeable period, they may make such [F35assessments or determinations or amendments of assessments or determinations] for other chargeable periods as may be necessary in consequence of the exercise of those powers[F36and “taxable field” and “non-taxable field” have the same meaning as in Part III of the Finance Act 1993].

(2)Where under sub-paragraph (1) above it appears to the Board that the assessable profit for a chargeable period ought to have been larger and that the deficiency resulted from an excessive allowable loss accruing in a subsequent period having been set against the profit for that period, the Board may (notwithstanding anything in section 34 of the M4Taxes Management Act 1970 (ordinary time limit for assessments)) make a further assessment by virtue of sub-paragraph (1) above at any time not later than six years after the end of the chargeable period in which the allowable loss accrued.

[F37(3)Where under this paragraph the Board make an assessment or determination or amend an assessment or determination they shall give notice thereof to the participator concerned; and sub-paragraphs (4), (5) and (6) of paragraph 10 above shall apply in relation to any such assessment, determination or amendment as they apply in relation to an assessment or determination under that paragraph.]

[F3812A(1)Where—U.K.

(a)the Board has extended the period for the delivery of any return that is required under paragraph 2 of this Schedule to be delivered for any chargeable period, and

(b)the relevant time falls more than one year after the end of the chargeable period,

the period within which the Board may make an assessment under this Schedule for that chargeable period shall not expire before the end of the period of five years beginning with the relevant time.

(2)In this paragraph “the relevant time” means the earlier of—

(a)the time which, as a result of the extension, is the latest time for the delivery of the return; and

(b)the time when the return is delivered.]

Payment of taxU.K.

13U.K.Subject to paragraph 14 below, the tax charged in an assessment made on a participator for any chargeable period [F39and payable shall be due within six months] after the end of that chargeable period or, if later, thirty days after the date of issue of the notice of assessment; but no tax shall be payable by virtue of this paragraph before 30th April 1976.

AppealsU.K.

14(1)A participator may appeal to the Special Commissioners against an assessment or determination [F40or an amendment of an assessment or determination] made on or in relation to him by notice of appeal in writing given to the Board within thirty days after the date of issue of the notice of assessment or determination [F40or of the notice of the amendment].U.K.

(2)The notice of appeal shall specify the grounds of appeal, but on the hearing of the appeal the Commissioners may allow the appellant to put forward any ground not specified in the notice, and may take it into consideration if satisfied that the omission was not wilful or unreasonable.

(3)A participator who has given notice of appeal under sub-paragraph (1) above against an assessment charging him with any tax for a chargeable period may, if he delivered a return for that period as required by paragraph 2 above, withhold, until the determination or abandonment of the appeal, so much of the tax charged in the assessment as is the smaller of—

(a)the amount of the tax so charged; and

(b)tax on the difference between—

(i)the aggregate of the consideration received or receivable for oil as stated in the participator’s return in pursuance of sub-paragraph (2) of that paragraph and, subject to sub-paragraph (4) below, the market value of oil as so stated; and

(ii)the aggregate of the corresponding consideration and value as included in the assessment.

(4)Subject to sub-paragraph (5) below, where the market value of all the oil for which a market value is stated in the participator’s return is, as stated in that return, less than the value which is produced for that oil by applying to it the average price mentioned in sub-paragraph (6) below, sub-paragraph (3) above shall have effect as if, for the reference to the market value of oil as so stated, there were substituted a reference to the value which is so produced for that oil.

(5)The comparison of values and the substitution required by sub-paragraph (4) above shall, in the case of an appeal by a participator whose return relates both to gas and to other oil, be made separately for the gas and for the other oil.

(6)The average price referred to in sub-paragraph (4) above is the average price at which all oil included in the relevant returns as oil delivered in the period covered by the returns and disposed of in sales at arm’s length was so disposed of.

(7)The relevant returns for the purposes of sub-paragraph (6) above are all the returns of all the participators in all oil fields which—

(a)were made for the chargeable period preceding that to which the appeal relates; and

(b)were delivered before the end of the chargeable period to which the appeal relates.

(8)The participator may at any time, if the Board do not object to his doing so, abandon an appeal instituted by him; and for this purpose he shall notify his desire to do so to the Board who may, within thirty days after being so notified, object by notice in writing to the participator.

(9)Where, at any time between—

(a)the giving of a notice of appeal against the assessment [F41determination or amendment] or from a decision of the Board on a claim under section 33 of the M5Taxes Management Act 1970 as applied by paragraph 1 above, and

(b)the determination of the appeal by the Special Commissioners,

the Board and the participator agree [F41on how the assessment, determination, amendment or decision should be varied or on what assessment or determination should be substituted in relation to the chargeable period in question, the same consequences shall ensue as if the Commissioners had determined the appeal to that effect].

[F42(10)If, on the appeal, it appears to a majority of the Commissioners present at the hearing that the assessment, determination or amendment is wrong—

(a)because no, or a smaller, assessable profit or a, or a larger, allowable loss has accrued for the chargeable period in question; or

(b)because a, or a larger, assessable profit or no, or a smaller, allowable loss has accrued for that period,

the Commissioners shall vary the assessment, determination or amendment in such manner, or substitute such assessment or determination, as may be required; and it shall be for the participator to satisfy the Commissioners as to any matter within paragraph (a) above.]

(11)Save as otherwise provided by this Schedule (including the provisions applied by paragraph 1 above), [F43the determination by the Special Commissioners of any appeal] under this Part of this Act shall be final and conclusive.

Interest on taxU.K.

15(1)Subject to sub-paragraph (2) below, tax charged in an assessment for a chargeable period shall carry interest at the [F44rate applicable under section 178 of the Finance Act 1989] from [F45two months] after the end of the period until payment.U.K.

(2)Nothing in sub-paragraph (1) above shall authorise or require interest to be charged from any time before 30th April 1976.

(3)Where, under paragraph 14(3) above, tax may be withheld until the determination or abandonment of an appeal, the interest on that tax may also be withheld until the determination or abandonment of the appeal.

16U.K.[F46Subject to paragraph 17 below] where any amount of tax charged by an assessment to tax [F47or paid on account of tax so charged] becomes repayable under any provision of this Part of this Act that amount shall carry interest at the [F48rate applicable under section 178 of the Finance Act 1989][F49from—

(a)two months after the end of the chargeable period for which the assessment was made; or

(b)the date on which it was paid,

whichever is the later, until [F50the order for repayment is issued]].

[F5117(1)This paragraph applies where—U.K.

(a)an assessment made on a participator for a chargeable period or an amendment of such an assessment (in this paragraph referred to as “the relevant assessment or amendment”) gives effect to relief under subsection (2) of subsection (3) of section 7 of this Act for one or more allowable losses accruing in a later chargeable period (in this paragraph referred to, in relation to the relevant assessment or amendment, as “the relief for losses carried back”); and

(b)the later chargeable period referred to in paragraph (a) above ends after 30th June 1991; and

(c)an amount of tax becomes repayable to the participator by virtue of the relevant assessment or amendment (whether wholly or partly by reason of giving effect to the relief for losses carried back).

(2)In the following provisions of this paragraph, so much of the repayment of tax referred to in sub-paragraph (1)(c) above as is attributable to giving effect to the relief for losses carried back is referred to as “the appropriate repayment”[F52 and, in relation to the appropriate repayment, the chargeable period for which the relevant assessment or amendment is made is referred to as “the repayment period”].

(3)For the purpose of determining the amount of the appropriate repayment in a case where the relevant assessment or amendment not only gives effect to the relief for losses carried back but also takes account of any other matter (whether a relief or not) which goes to reduce the assessable profit of the period in question or otherwise to reduce the tax payable for that period, the amount of the repayment which is attributable to the relief for losses carried back is the difference between)—

(a)the total amount of tax repayable by virtue of the relevant assessment or amendment; and

(b)the amount of tax (if any) which would have been so repayable if no account had been taken of the relief for losses carried back.

(4)[F53Subject to sub-paragraph (6) below]Where this paragraph applies, the amount of interest which, by virtue of paragraph 16 above [F54which is treated as reducing the assessable profit of the repayment period], is carried by the appropriate repayment shall not exceed the difference between—

(a)[F55the relevant percentage of the amount] of the allowable loss or losses referred to in sub-paragraph (1)(a) above; and

(b)the amount of the appropriate repayment.]

[F56(5)For the purposes of sub-paragraph (4)(a) above—

(a)where the repayment period ends on or before 30th June 1993, the relevant percentage, in relation to the amount of the loss or losses which is treated as reducing the assessable profit accruing to the participator for that period is 85 per cent.; and

(b)in relation to the amount of the loss or losses which is treated as reducing the assessable profit accruing to the participator for any later repayment period, the relevant percentage is 60 per cent.

(6)If, in order to give effect to the relief for losses carried back, a repayment of APRT falls, or will on the making of a claim fall, to be made with respect to a chargeable period which is the repayment period in relation to the appropriate repayment, the reference in sub-paragraph (4)(b) above to the appropriate repayment shall be construed as a reference to the aggregate of that repayment and the repayment of APRT.

(7)In sub-paragraph (6) above “APRT” means advance petroleum revenue tax paid under Chapter II of Part VI of the M6Finance Act 1982.]