Oil Taxation Act 1975 section 4

Allowance of expenditure on long-term assets

Section 4 sets out how expenditure on long-term assets used in connection with an oil field is spread over time for petroleum revenue tax purposes, rather than being allowed all at once.

• Expenditure on acquiring, creating, or enhancing a long-term asset used in an oil field is allowable over the asset's useful life, not in a single claim period.
• The allowable proportion for each period is based on the ratio of time the asset has been used in connection with the field to its total expected useful life.
• If an asset is used partly for the field and partly for other purposes, only a proportionate share of the time counts as field use.
• Adjustments are made each claim period: if the cumulative allowance exceeds what has already been claimed, the excess is allowed; if it falls short, previously claimed expenditure is clawed back.

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