Oil Taxation Act 1975 section 6

Allowance of unrelievable loss from abandoned field

Section 6 allows a participator in an oil field to claim relief for losses from an abandoned oil field that could not be relieved against profits of that abandoned field, by treating them as an allowable deduction against another field's profits.

• Where a participator (or an associated company) has an allowable loss from an abandoned oil field that cannot be set against that field's assessable profits, the unrelieved portion qualifies as an "unrelievable field loss" eligible for cross-field relief.
• A company is treated as associated with the participator if, throughout the relevant period, one was a 51% subsidiary of the other (and that other was not itself a 51% subsidiary), or both were 51% subsidiaries of the same ultimate parent company.
• Oil production from a field is not regarded as having permanently ceased until all oil wells in the field have been permanently abandoned — this is the trigger point for claiming relief under this section.
• Where the person who incurred the loss also claimed certain types of expenditure unrelated to the abandoned field (such as abortive exploration, research, or cross-field expenditure) on or after 29 November 1994, the unrelievable field loss must be reduced by the amount of that unrelated expenditure allowed.

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