How does Schedule 4 paragraph 5 of the Oil Taxation Act 1983 apply Schedule 2 rules to foreign field assets?

Paragraph 5 imports most of Schedule 2's supplementary provisions into the foreign field asset regime, but with key modifications. References to tariff or disposal receipts are read as including chargeable receipts, oil field references become foreign field references, and qualifying asset references become chargeable foreign field asset references. Paragraphs 4, 6, 7, and 8 of Schedule 2 are excluded entirely.

How are the anti-avoidance connected-party rules in Schedule 2 extended for foreign field assets?

The anti-avoidance rule in Schedule 2 paragraph 2, which substitutes market value for actual consideration in connected-party avoidance arrangements, is extended so that references to sections 6 and 7 of the 1983 Act also include the principal charging section for foreign field asset receipts. This ensures avoidance arrangements involving foreign field assets are equally caught.

Which parts of Schedule 2 are excluded when applied to chargeable receipts from foreign field assets?

Paragraphs 4, 6, 7, and 8 of Schedule 2 are excluded from the read-across because Schedule 4 makes separate provision for these matters in the foreign field context. Additionally, sub-paragraph (4) of paragraph 11 is disapplied as it is not relevant to the foreign field regime and would otherwise cause confusion.

How are disposal-type chargeable receipts from foreign field assets treated under this provision?

Schedule 2 paragraphs 9 and 10, covering brought-in assets and deballasting assets respectively, apply to foreign field assets but only catch chargeable receipts corresponding to disposals under paragraph (c) of subsection (1) of the principal charging section. When applying the deballasting valuation rule, a specific exclusion in section 6(4)(b) relating to tariff receipt calculations is ignored.

Oil Taxation Act 1983 section Sch 4 para 5

Application of Schedule 2 rules to chargeable receipts from foreign field assets

Schedule 4 paragraph 5 explains how the general supplementary rules in Schedule 2 (which normally apply to tariff and disposal receipts from UK oil field assets) are adapted and applied to chargeable receipts arising from foreign field assets used in the UK.

Most of Schedule 2's supplementary provisions apply to chargeable receipts from foreign field assets, but with certain exclusions and modifications to fit the foreign field context.
Key terms are re-read so that references to tariff or disposal receipts include chargeable receipts, references to oil fields mean foreign fields, and references to qualifying assets mean chargeable foreign field assets.
The anti-avoidance rules in Schedule 2 covering connected-party transactions are extended so that they also catch consideration arising under the principal charging section for foreign field assets.
Specific adjustments are made for disposal-type chargeable receipts, including those relating to brought-in assets and deballasting assets, and certain sub-paragraphs that are not relevant to the foreign field regime are disapplied.

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