Oil Taxation Act 1983 section 5

Schedule 1 paragraph 5 – Apportionment of allowable expenditure on new assets used across multiple oil fields

Section 5 of Schedule 1 deals with how allowable expenditure on a replacement or new asset should be split when the purchasing participator holds interests in more than one oil field and the asset serves (or is expected to serve) two or more of those fields.

• Where a participator holds interests in multiple oil fields and a new asset is used across two or more of them, the allowable expenditure must be apportioned between those fields on a just and reasonable basis, unless it is fair to allocate the whole amount to a single field.
• If the asset's use in connection with one field (the "paying field") generates tariff or disposal receipts that are attributed under section 8 to a different field (the "chargeable field"), the portion of expenditure that would otherwise go to the paying field is redirected to the chargeable field, to the extent it relates to the receipt-generating use.
• If the asset is also used (or expected to be used) for purposes unconnected with any of the participator's own fields, a just and reasonable percentage of the expenditure is first set aside for that non-field use, and that percentage is then added to the share already allocated to the chargeable field for allowance claim purposes.
• Where the relevant claim periods for the participator's different fields do not coincide, the apportionment is determined by reference to the end of whichever claim period expires earliest.

---