Oil Taxation Act 1983 section Schedule 2 paragraph 4

Exempt gas fields — modified treatment of tariff and disposal receipts

Schedule 2, paragraph 4 deals with how tariff receipts and disposal receipts are attributed to a participator's oil field when all the oil produced from that field is exempt gas and therefore disregarded for gross profit calculations.

• This provision applies when all oil that would otherwise count in calculating a participator's gross profit or loss from a chargeable field is exempt gas, and therefore entirely disregarded under the exempt gas rules in section 10 of the Oil Taxation Act 1975.
• In these exempt gas situations, the rules for attributing tariff receipts and disposal receipts to oil fields are modified: mobile assets dedicated to the field are excluded from qualifying, and expenditure that would have qualified as allowable but for the exempt gas restriction is still treated as relevant for determining whether an asset qualifies.
• A further modification applies to assets used in connection with an oil field but not qualifying under the main rules: the test is adjusted so that it asks whether expenditure "would not" qualify even if the exempt gas disallowance were set aside, rather than simply whether expenditure "does not" qualify.
• Where an asset only qualifies because of these modified exempt gas rules, the provisions that deal with bringing disposal receipts into account over time (the spreading and adjustment rules in section 7(6) to (8)) do not apply.