How do standard PRT rules apply to foreign field profits under the Oil Taxation Act 1983?

Under Schedule 4 paragraph 9, assessable profits and allowable losses from foreign fields are treated identically to ordinary PRT assessable profits and allowable losses under the Oil Taxation Act 1975. The full machinery covering charge to tax, computation, assessment, collection, and appeals applies to foreign field results in the same manner as domestic UK continental shelf fields.

Is oil allowance available for foreign field profits under PRT?

No. The oil allowance under section 8 of the Oil Taxation Act 1975, which normally reduces assessable profit before PRT is calculated, is not available for foreign fields. The full assessable profit from a foreign field is therefore subject to PRT without this per-field relief that shields a certain amount of production from tax.

Do Taxes Management Act 1970 provisions apply to foreign field profits and losses?

Yes. Certain provisions of the Taxes Management Act 1970, incorporated into the PRT regime by Schedule 2 paragraph 1 of the Oil Taxation Act 1975, apply to foreign field profits and losses. These cover administrative matters including returns, assessments, appeals, and collection procedures, ensuring consistent procedural treatment across all PRT-liable fields.

What is the practical effect of denying oil allowance on foreign field assessable profits?

Without oil allowance, a participator's entire assessable profit from a foreign field is subject to PRT. For example, a £10 million foreign field profit would be fully taxable, whereas a UK continental shelf field profit of the same amount could be reduced by the oil allowance before PRT is charged, resulting in a lower effective tax liability.

Oil Taxation Act 1983 section Schedule 4 paragraph 9

Application of PRT rules to foreign field profits and losses

Schedule 4 paragraph 9 explains how the standard petroleum revenue tax (PRT) legislation applies to assessable profits and allowable losses from foreign fields, with one important exception: oil allowance is not available.

Assessable profits and allowable losses from foreign fields, as determined under paragraph 8(1), are treated in the same way as ordinary PRT assessable profits and allowable losses under the Oil Taxation Act 1975.
The administrative and procedural provisions of the Taxes Management Act 1970, as applied to PRT by the 1975 Act, also apply to foreign field profits and losses.
The oil allowance under section 8 of the Oil Taxation Act 1975 cannot be used to reduce the assessable profit from a foreign field for any chargeable period.
In all other respects, foreign field profits and losses are subject to the same PRT rules as domestic UK continental shelf fields.

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