Corporation Tax Act 2010 section 283

Valuation where excess of nominated proceeds

Section 283 deals with how an excess of nominated proceeds under the oil nomination scheme is treated for corporation tax purposes, ensuring that any uplift to oil disposal values for Petroleum Revenue Tax is also reflected in the corporation tax computation.

• Where the nomination scheme produces an excess of nominated proceeds for a chargeable period, that excess must be added to the consideration the company is treated as receiving for oil it disposed of in that period, for corporation tax on income purposes.
• This addition applies even if the relevant oil field is not actually within the charge to Petroleum Revenue Tax, so long as it would have been taken into account had the company been chargeable under the Oil Taxation Act 1975.
• The same excess amount is then available as a deduction when calculating the profits of any trade that does not consist of oil-related activities — in other words, a non-ring-fence trade.
• The effect is to ensure that the full market value of UK-extracted oil is reflected in ring fence trade profits for corporation tax, while preventing double counting by allowing a corresponding deduction against non-ring-fence activities.