Corporation Tax Act 2010

Deduction of PRT in calculating income for corporation tax purposes

299Deduction of PRT in calculating income for corporation tax purposes

(1)This section applies if a participator in an oil field has paid any petroleum revenue tax with which the participator was chargeable for a chargeable period.

(2)In calculating for corporation tax the amount of the participator’s income arising from oil extraction activities or oil rights in the relevant accounting period, there is to be deducted an amount equal to that petroleum revenue tax.

(3)There are to be made all such adjustments of assessments to corporation tax as are required in order to give effect to subsection (2).

(4)In this section “the relevant accounting period”, in relation to any petroleum revenue tax paid by a company, means—

(a)the accounting period of the company in or at the end of which the chargeable period for which that tax was charged ends, or

(b)if that chargeable period ends after the accounting period of the company in or at the end of which the company—

(i)ceases to carry on the trade giving rise to the income referred to above, or

(ii)ceases to be within the charge to corporation tax in respect of the trade,

that accounting period.

300Effect of repayment of PRT: general rule

(1)This section applies if some or all of the petroleum revenue tax in respect of which a deduction has been made under section 299(2) is subsequently repaid.

(2)The deduction is to be reduced or extinguished accordingly.

(3)Any additional assessment to corporation tax required in order to give effect to subsection (2) may be made at any time not later than 4 years after the end of the calendar year in which the petroleum revenue tax was repaid.

(4)This section is subject to section 301.

301Effect of repayment of PRT: special rule

(1)This section applies if, in a case where paragraph 17 of Schedule 2 to OTA 1975 applies, an amount of petroleum revenue tax in respect of which a deduction has been made under section 299(2) is repaid as a result of an assessment under that Schedule or an amendment of such an assessment.

(2)As regards so much of that repayment as constitutes the appropriate repayment—

(a)section 300 does not apply, and

(b)the following provisions apply in relation to the company which is entitled to the repayment.

(3)In calculating for corporation tax the amount of the company’s income arising in the relevant accounting period from oil extraction activities or oil rights there is to be added an amount equal to the appropriate repayment (but this is subject to subsections (4) and (5)).

(4)Subsection (5) applies if—

(a)two or more carried back losses give rise to the appropriate repayment,

(b)the operative chargeable period in relation to each of the carried back losses is not the same, and

(c)if this section were applied separately in relation to each of the carried back losses there would be more than one relevant accounting period.

(5)The appropriate repayment is to be treated as apportioned between each of the relevant accounting periods mentioned in subsection (4)(c) in such a way as to secure that the amount added as a result of subsection (3) in relation to each of those relevant accounting periods is what it would have been if—

(a)relief for each of the carried back losses for which there is a different operative chargeable period had been given by a separate assessment or amendment of an assessment under Schedule 2 to OTA 1975, and

(b)relief for a carried back loss accruing in an earlier chargeable period had been so given before relief for a carried back loss accruing in a later chargeable period.

(6)Any additional assessment to corporation tax required in order to give effect to the addition of an amount as a result of subsection (3) may be made at any time not later than 4 years after the end of the calendar year in which the repayment of petroleum revenue tax comprising the appropriate repayment is made.

(7)In this section—

• “allowable loss” has the same meaning as in Part 1 of OTA 1975 (see section 2 of that Act),

• “the appropriate repayment” has the meaning given by paragraph 17(2) of Schedule 2 to that Act,

• “carried back loss”, in relation to the appropriate repayment, means an allowable loss—

  (a)

  which falls within paragraph 17(1)(a) of Schedule 2 to OTA 1975, and

  (b)

  which (alone or together with one or more other carried back losses) gives rise to the appropriate repayment,

• “the operative chargeable period”, in relation to a carried back loss, means the chargeable period in which the loss accrued, and

• “the relevant accounting period”, in relation to the company which is entitled to the appropriate repayment, means—

  (a)

  the accounting period in or at the end of which the operative chargeable period ends,

  (b)

  if the company ceases to carry on its ring fence trade before the end of the operative chargeable period, the last accounting period of that trade, or

  (c)

  if the company ceases to be within the charge to corporation tax in respect of that trade before the end of the operative chargeable period, the accounting period during or at the end of which the company ceased to be within the charge to corporation tax in respect of that trade.