Oil Taxation Act 1983 section 5

Schedule 3, paragraph 5 – Calculating the reduction to the tariff receipts allowance

Section 5 explains how to calculate the reduction to a participator's tariff receipts allowance when qualifying tariff receipts span more than one chargeable period, ensuring the allowance does not exceed the actual qualifying receipts for any given period.

• For each relevant chargeable period, a notional cash equivalent of the participator's share of the tariff receipts allowance must be calculated, using the qualifying tariff receipts and qualifying oil attributable to that period.
• The formula from paragraph 2 is applied, but with "A" set to the qualifying tariff receipts allocated to the period (under paragraph 4) and "C" set to the qualifying oil for that period.
• If the calculated cash equivalent for any period exceeds the qualifying tariff receipts for that same period, it is capped at the amount of those qualifying tariff receipts.
• The total reduction is the cash equivalent for the single relevant chargeable period, or, where there are multiple relevant periods, the sum of the capped cash equivalents across all of them.