How are attributed amounts treated for current and former participators under OTA 1975 section 2C?

For a current participator who still holds an interest in the oil field during the period when abandonment expenditure is incurred, the attributed amount is added to their existing share of abandonment expenditure. For a former participator who no longer holds an interest, the attributed amount becomes their entire share of abandonment expenditure for that field.

What key terms does paragraph 2C of the Oil Taxation Act 1975 define?

Paragraph 2C defines abandonment expenditure as costs allowable under section 3(1)(i) or (j), an abandonment programme approved under Part 4 of the Petroleum Act 1998, current and former participators by reference to section 12, the relevant oil field, the sum in default reduced by amounts paid, and relevant agreement per section 104(5)(a) of the Finance Act 1991.

When is a current participator treated as having defaulted under OTA 1975 paragraph 2C?

A current participator is treated as defaulting when two conditions are met: they fail to make the full payment on the due day, and either some part remains unpaid on the 60th day after the due day, or their licence interest becomes liable to sale or forfeiture before that 60th day as a consequence of the failure to pay.

How is the 'sum in default' calculated under OTA 1975 section 2C?

The sum in default is the total payment the defaulting participator is liable to make towards abandonment expenditure, reduced by any amount they have actually paid. This net amount is then attributed under the paragraph 2A rules to the other contributing participators in the relevant oil field.

Oil Taxation Act 1975 section 2C

Paragraph 2C Claim periods and claims

Section 2C explains how amounts attributed under the default rules are treated for current and former participators, defines the key terms used in the abandonment expenditure provisions, and sets out when a current participator is regarded as having defaulted on a payment obligation.

When a default occurs, the attributed amount is treated as an addition to a current participator's share of abandonment expenditure, or as the entire share for a former participator.
Key definitions cover abandonment expenditure, current and former participators, the relevant oil field, and the sum in default.
A current participator is treated as defaulting if they fail to make a payment in full by its due date and either part of the payment remains unpaid 60 days later, or their licence interest becomes liable to sale or forfeiture before that 60th day.
The "due day" is the date on which the payment towards abandonment expenditure falls due under the relevant agreement or the approved abandonment programme.

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