Corporation Tax Act 2010 section 282

Valuation where disposal not sale at arm's length

Section 282 requires that when oil is disposed of other than at arm's length, and the disposal falls outside the petroleum revenue tax (PRT) rules in section 281, the transaction must be treated as taking place at market value for corporation tax purposes.

• The section applies where a person disposes of oil they acquired through their own oil extraction activities or through oil rights they hold, and the disposal is not a sale at arm's length.
• Both the disposal and the acquisition by the recipient are treated as having been made for a consideration equal to the market value of the oil.
• Market value is determined using the definitions in paragraphs 2 and 3A of Schedule 3 to OTA 1975, which cover oil including light gases, but with specific modifications.
• The modifications substitute the actual disposal date for the notional delivery day and disapply paragraph 2(4) of that Schedule.