Oil Taxation Act 1983 section 7

Chargeable receipts from disposals

Section 7 establishes how proceeds from disposing of qualifying assets (such as platforms, pipelines and other long-term infrastructure) are brought into the petroleum revenue tax computation as chargeable receipts.

• When a participator in an oil field sells or otherwise disposes of a qualifying asset (or an interest in one), the consideration received is treated as a positive amount (a "disposal receipt") in computing assessable profit or allowable loss for that field.
• Disposals are only caught if they occur within two years of the latest of: the asset ceasing to be used in connection with any oil field, ceasing to generate tariff receipts, or ceasing to generate tax-exempt tariffing receipts.
• Certain types of payment are excluded from disposal receipts — specifically, interest or other financing costs, and payments made to acquire a direct or indirect interest in oil won or to be won from a field. Where consideration includes such amounts, it must be apportioned on a just and reasonable basis.
• Where a qualifying asset gives rise to disposal receipts in a claim period, the amount of uplift (supplement) that the participator can claim on allowable expenditure under section 2(9) of the Oil Taxation Act 1975 is reduced by a fraction reflecting the ratio of disposal receipts (or the expenditure allowed for that asset, if lower) to total allowable expenditure for the field in that period.

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