Oil Taxation Act 1975 section 9

Limit on amount of tax payable

Section 9 sets a cap on the amount of petroleum revenue tax (PRT) that a participator in an oil field can be required to pay in any chargeable period, by reference to their adjusted profit and accumulated capital expenditure.

• PRT for any qualifying chargeable period is capped at 80% of the participator's adjusted profit for the period, less 15% of their accumulated capital expenditure at the end of that period.
• The cap applies during the early production life of the field, extending for a further limited number of periods beyond the participator's net profit period — specifically, half the number of earlier periods in which meaningful production occurred.
• Adjusted profit is calculated by taking the assessable profit (before loss relief and oil allowance) and adding back certain deductions including supplement on capital expenditure, but excluding capital expenditure that did not qualify for supplement.
• Accumulated capital expenditure is the running total of qualifying capital expenditure (that attracted supplement) taken into account in computing profits or losses for the current and all earlier chargeable periods.

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