Petroleum Revenue Tax Act 1980 section Schedule para 2

Preliminary computation of assessable profit or allowable loss

Schedule paragraph 2 sets out how a preliminary computation must be carried out to determine whether a participator has an assessable profit, an allowable loss, or neither, for a chargeable period — and how certain figures and claims are to be treated in that computation.

• A preliminary computation must be made, following the standard profit/loss rules but with specified modifications, to establish whether there is an assessable profit, an allowable loss, or neither, and, if so, its amount.
• Market values, prices, and certain other amounts used in the computation must be drawn from the figures the participator has included in their statutory return; tariff and disposal receipts (and any tariff receipts allowance reduction) are likewise taken from the return.
• Expenditure for which a claim has been submitted but on which HMRC have not yet given a decision may be treated as having been allowed (including, where relevant, as qualifying for supplement), and the participator's share of any such expenditure claimed under Schedule 5 is the share proposed in the claim.
• Losses claimed but not yet decided upon by HMRC may also be treated as allowed, but no item of expenditure or loss may be counted in this preliminary computation for more than one chargeable period or more than one oil field.