Oil Taxation Act 1983 Schedule 1 para 1

Associated assets and deemed connection with the principal field

Schedule 1, paragraph 1 establishes the rules for treating certain non-mobile assets as connected with a participator's oil field (the "principal field") where those assets generate tariff receipts and are used in association with another asset already connected with that field.

• The paragraph applies where, after 30 June 1982, a participator incurs expenditure on a non-mobile asset that generates (or is expected to generate) tariff receipts and has a useful life extending beyond the first chargeable period in which those receipts arise.
• The asset must be used in association with another asset that is itself connected (or expected to be connected) with the participator's principal field — this linked asset is called the "associated asset."
• The use of the associated asset to generate tariff receipts is then treated as use in connection with the principal field, which is important for claiming relief under the expenditure and allowance provisions.
• "Use in association" only counts if the asset is used in connection with another UK oil field, would be so used but for the exempt gas rules, or would constitute use in connection with an overseas (external) field on the assumption that the field were within the UK petroleum tax regime.