Oil Taxation Act 1983 section 9

Tariff receipts allowance

Section 9 provides a tax relief that reduces the amount of tariff receipts (fees for sharing infrastructure) that a participator in an oil field must include in their taxable profits, by giving an allowance of 250,000 metric tonnes per chargeable period for each user field.

• When a participator in an oil field (the "principal field") earns qualifying tariff receipts from another field (a "user field") for the use of infrastructure such as pipelines or processing facilities, those receipts can be reduced by a tariff receipts allowance before being included in taxable profits.
• The allowance is 250,000 metric tonnes per chargeable period for each user field, shared among the participators in the principal field; if the qualifying tariff receipts exceed the cash equivalent of a participator's share of the allowance, only the excess is taxable, and if receipts equal or fall below that share, they are reduced to nil.
• A "user field" can be another UK oil field (excluding the principal field itself and certain non-taxable fields), or a designated foreign field outside UK jurisdiction, although no new foreign field designations have been permitted since 1 July 1993.
• Any reduction in tariff receipts obtained through this allowance must be added back when computing the expenditure supplement under the restriction rules, so the relief does not also generate an additional supplement benefit; and for gas, 1,100 cubic metres at standard conditions is treated as equivalent to one metric tonne of non-gas oil.

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