Oil Taxation Act 1975 Schedule 3 paragraph 8

Certain subsidised expenditure to be disregarded

Paragraph 8 of Schedule 3 prevents expenditure that has been funded or reimbursed by third parties from being claimed as allowable expenditure for petroleum revenue tax purposes, subject to certain exceptions.

• Expenditure met by the Crown, any government body, public or local authority, or any other third party cannot be treated as expenditure incurred by the participator for PRT purposes.
• An exception applies where the funding comes from specific industrial development grants under Part I of the Industry Act 1972, or equivalent Northern Ireland grants declared by Treasury order to correspond to those grants.
• A further exception applies where a guarantor makes a payment under an abandonment guarantee to meet decommissioning expenditure for which the relevant participator is liable — such expenditure is not disqualified merely because it was funded by the guarantor.
• Insurance proceeds or compensation received for the loss or destruction of an asset are ignored when determining whether expenditure has been met by a third party.