Petroleum Revenue Tax
How Petroleum Revenue Tax (PRT) is charged on oil and gas production and submitting returns to HM Revenue and Customs(HMRC).
Petroleum Revenue Tax (PRT) is a tax on the profits from oil and gas production in the UK or on the UK continental shelf.. PRT only applies to fields that were approved before 16 March 1993. These are known as ‘taxable fields’.
PRT was permanently zero-rated from 1 January 2016. It was not abolished because some companies still require access to their tax history for carrying back trading losses and decommissioning costs.
Following the zero-rating of PRT, taxable oil fields can become non-table if the responsible person, following agreement from all current participators in that field, elects to opt the field out of the PRT regime.
If you hold a production licence for a taxable field, you pay PRT on your share of the income from the field, minus any allowable costs.
The ‘responsible person’ (usually the field operator) must submit a return showing the total amount of oil and gas produced from the field. The deadline is one month after the end of each chargeable period.
Each company with a licence for the field must then submit a separate return showing income from all their taxable fields. The deadline is 2 months after the end of each chargeable period.
Most companies that submit PRT returns use their own software to file electronically. HMRC don’t issue returns unless specifically requested.
Undeveloped parts of fields
If part of a taxable field hasn’t been developed because PRT makes it commercially unviable, the companies licenced for the field can apply for that part of the field to be excluded. If agreed, the ‘carved out’ part will be regarded as a new field and will be exempt from PRT.