Oil Taxation Act 1975 Schedule 3 paragraph 7

Exclusion from section 2(4)(b) and (5)(d) of offshore oil in transit to place of first landing

Paragraph 7 of Schedule 3 provides that oil which is still being transported to its first landing point in the UK at the end of a chargeable period is excluded from certain adjustments when calculating a participator's assessable profit or allowable loss.

• When computing assessable profit or allowable loss, the market value of oil won from a field may need to be taken into account as part of opening and closing stock adjustments.
• However, if oil was still in transit to its first UK landing point (or other relevant delivery point) at the end of the previous chargeable period, its market value is excluded from the opening stock adjustment.
• Similarly, if oil is still in transit to its first UK landing point at the end of the current chargeable period, its market value is excluded from the closing stock adjustment.
• The effect is that oil which has not yet reached shore is disregarded for stock valuation purposes, preventing it from distorting the profit or loss calculation for the period.