Oil Taxation Act 1975 Schedule 3 paragraph 3

Aggregate market value of oil for purposes of section 2(5)

Section 2(5) requires certain oil to be valued at market value when calculating assessable profits and allowable losses. Paragraph 3 of Schedule 3 explains how to arrive at the aggregate market value of that oil.

• This paragraph sets out the method for calculating the total (aggregate) market value of oil that falls within section 2(5)(b) (oil delivered to a connected party or otherwise than at arm's length) and section 2(5)(c) (oil appropriated by the participator for their own use, such as refining).
• For oil delivered during a chargeable period under section 2(5)(b), you determine the market value of each individual delivery using the rules in Schedule 3 paragraph 2 (and paragraph 2A where applicable), and then add all those individual market values together to produce the aggregate figure.
• For oil appropriated during a chargeable period under section 2(5)(c), you follow the same approach: determine the market value for each individual appropriation using the Schedule 3 paragraph 2 rules (and paragraph 2A where applicable), and then total those individual values.
• The resulting aggregate market value is used in place of actual sale proceeds when computing assessable profits under section 2, ensuring that non-arm's length transactions and self-used oil are taxed on the basis of what the oil would have fetched on the open market.