Oil Taxation Act 1975

13Treatment of oil extraction activities etc. for purposes of income tax and corporation tax

(1)Where a person carries on as part of a trade—

(a)any oil extraction activities ; or

(b)any of the following activities, namely the acquisition, enjoyment or exploitation of oil rights ; or

(c)activities of both those descriptions,

those activities shall be treated for all purposes of income tax, and for the purposes of the charge of corporation tax on income, as a separate trade, distinct from all other activities carried on by him as part of the trade.

(2)Relief in respect of a loss incurred by a person shall not be given under section 168 or 177(2) of the Taxes Act against income arising from oil extraction activities or from oil rights except to the extent that the loss arises from such activities or rights.

(3)Subject to the following subsection, a capital allowance which is to be given by discharge or repayment of tax shall not to any extent be given effect under section 71 or 74 of the [1968 c. 3.] Capital Allowances Act 1968 by deduction from or set off against income arising from oil extraction activities or from oil rights.

(4)The preceding subsection shall not apply to a capital allowance such as is there mentioned which falls to be made to a company for any accounting period in respect of an asset used in the relevant accounting period by a company associated with it and so used in carrying on oil extraction activities. For the purposes of this subsection the relevant accounting period is that in which the allowance in question first falls to be made to the company (whether or not it can to any extent be given effect in that period under section 74(1) of the Capital Allowances Act 1968).

(5)On a claim for group relief made by a claimant company in relation to a surrendering company, group relief shall not be allowed against income of the claimant company arising from oil extraction activities or from oil rights except to the extent that the claim relates to losses incurred by the surrendering company that arose from such activities or rights.

(6)Subsection (1) above shall have effect as regards chargeable periods beginning after 11th July 1974, subsections (2) and (5) above shall have effect as regards claims for relief in respect of chargeable periods so beginning, and subsection (3) above, with subsection (4), shall have effect as regards capital allowances falling to be made for chargeable periods so beginning; and in the case of a chargeable period beginning on or before and ending after 11th July 1974—

(a)subsection (1) above shall have effect as regards the part of the period falling after that date ;

(b)subsections (2) and (5) above shall have effect as regards the giving of relief against income attributable to that part of the period ; and

(c)subsection (3) above, with subsection (4), shall have effect as regards deduction from or set off against income so attributable;

and there shall be made all such apportionments as are necessary to give effect to paragraphs (a) to (c) above.