Corporation Tax Act 2010 section 285

Valuation where appropriation to refining etc

Section 285 deals with how oil is valued for corporation tax purposes when an oil-producing company does not sell its oil to a third party but instead transfers it into another part of its own business, such as refining, and where the petroleum revenue tax (PRT) rules do not apply to that transfer.

• When an oil company appropriates oil it has extracted (or acquired through oil rights) to refining or any non-production use, and the PRT-based valuation rules in section 284 do not apply, this section requires a deemed sale and purchase at market value
• The company is treated as having simultaneously sold and repurchased the oil at the point of appropriation, creating a taxable transaction at market value for corporation tax on income
• Market value is determined using the PRT valuation rules in Schedule 3 to the Oil Taxation Act 1975, but with modifications so that the relevant date is the day of appropriation rather than the notional delivery day used under PRT
• Certain PRT-specific provisions are disapplied or reinterpreted to fit the corporation tax context, including the omission of paragraph 2(4) of Schedule 3 to OTA 1975