Oil Taxation Act 1983 section 11

Anti-avoidance: asset usage between connected parties

Section 11 is an anti-avoidance provision that counteracts arrangements where consideration for the use of an asset in connection with an oil field is routed through a connected or associated person who does not hold a qualifying asset, with the main purpose of avoiding petroleum revenue tax or corporation tax.

• Where a person (the "recipient") receives consideration for the use of an asset that is not a qualifying asset in their hands, and a connected or associated person (the "user") who is a participator in an oil field actually uses that asset in connection with a field, and the arrangement is mainly aimed at avoiding PRT or corporation tax, the anti-avoidance rule is triggered.
• When triggered, the user is treated as though they had received any consideration arising from the asset's use (other than consideration paid by the user themselves), and as though they had incurred a just and reasonable proportion of the recipient's expenditure connected with the asset — effectively re-attributing the income and costs to the participator who benefits from the field.
• A participator is "associated" with another person if the participator, acting together with one or more other participators in the same or any relevant oil field (including foreign fields), would be able to control that other person. "Control" follows the meaning in the Corporation Tax Act 2010. Foreign fields are treated as oil fields for this purpose.
• Where more than one user exists in relation to a single recipient, the re-attributed consideration and expenditure must be apportioned between them on a just and reasonable basis. The rule re-attributing the recipient's expenditure does not apply if the asset is a mobile asset that is not dedicated to an oil field.

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