Oil Taxation Act 1975 section 13

Allowance of PRT as a deduction for corporation tax purposes

Section 13 establishes how Petroleum Revenue Tax (PRT) paid by a company is treated as an allowable deduction when calculating the company's profits for corporation tax purposes.

• PRT paid by a company in respect of an oil field is allowable as a deduction against the company's ring fence profits for corporation tax purposes, effectively reducing the amount of profit subject to corporation tax.
• The deduction is given for the chargeable period in which the PRT is paid, rather than the period to which the underlying profits relate, ensuring the timing of relief follows actual payment.
• Any PRT repaid to the company (for example, following a reassessment) must be brought back into charge as a receipt for corporation tax purposes in the period the repayment is received.
• The provision was amended by the Income and Corporation Taxes Act 1988 to align with the wider consolidation of direct tax legislation, but the underlying principle of PRT deductibility for corporation tax remained unchanged.

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