Income Tax (Trading and Other Income) Act 2005 section 225H

Valuation where excess of nominated proceeds

Section 225H ensures that where the nomination scheme adds an amount to the disposal value of oil for Petroleum Revenue Tax purposes, that same amount is also added for income tax purposes.

• The nomination scheme is a mechanism to ensure the full value of oil extracted from the UK sector is properly reflected in profits calculated for Petroleum Revenue Tax and for the ring fence trade.
• Where there is an excess of nominated proceeds for a chargeable period, the section applies whether the person is actually chargeable to Petroleum Revenue Tax or would have been chargeable in respect of an oil field.
• The excess amount must be added to the consideration the person is treated as having received for oil they disposed of during the period, for income tax purposes.
• This prevents any shortfall in the taxable value of oil disposals by aligning the income tax treatment with the Petroleum Revenue Tax treatment under the nomination scheme.