What does section 12A of the Oil Taxation Act 1975 do?

Section 12A establishes the specific dates on which shipped crude oil is treated as delivered or appropriated for petroleum revenue tax purposes, where the oil has not been sold at arm's length. It provides certainty by linking the deemed date to either the completion of loading or the bill of lading date.

Which types of oil are covered by section 12A of the Oil Taxation Act 1975?

Section 12A covers crude oil, excluding light gases, won from an oil field by a participator. The oil must either be disposed of in a non-arm's length transaction or relevantly appropriated by the participator for their own use, and it must meet a shipping condition involving transport by ship.

How is the delivery or appropriation date determined when oil is shipped directly from the extraction site?

Where crude oil is transported by ship directly from the place of extraction, the deemed date of delivery or appropriation under section 12A is the date on which loading of the cargo onto the ship is completed. This provides a clear, verifiable date for petroleum revenue tax valuation purposes.

What date applies when oil is piped to a UK location and then loaded onto a ship?

Where oil is first transported by pipeline to a United Kingdom location and then loaded onto a ship at that location, the deemed delivery or appropriation date is the date shown on the bill of lading. This removes ambiguity in establishing the correct valuation period for petroleum revenue tax.

Oil Taxation Act 1975 section 12A

Date of delivery or appropriation: shipped oil not sold at arm's length

Section 12A establishes the specific dates on which certain shipped oil is treated as delivered or appropriated for petroleum revenue tax purposes, where that oil has not been sold at arm's length.

This section applies to crude oil (excluding light gases) that a participator either disposes of in a non-arm's length sale or appropriates for their own use
The oil must be transported by ship from the place of extraction, or piped to a UK location and then loaded onto a ship
Where oil is shipped directly from the extraction site, the deemed delivery or appropriation date is the date when loading of the ship is completed
Where oil is piped to a UK location and then loaded onto a ship, the deemed delivery or appropriation date is the date shown on the bill of lading

Access full legislation.And much more.

By becoming a member, your team gets full access to Tax World research tools and source-backed tax resources.

Become a member