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HMRC internal manual

Oil Taxation Manual

HM Revenue & Customs
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PRT: administration: claims outline

If the Responsible Person or a participator wishes to claim expenditure and uplift then it must make a formal claim. Relief for expenditure is obtained by the claimant only after the expenditure is formally allowed on a decision given by the Board. Expenditure allowed on a claim is deducted in computing the assessable profit or allowable loss of a participator in the assessment, or loss determination, for a chargeable period which is next made after the date of the claim decision. To cater for the situation where claims are allowed some time after the expenditure in question is incurred, a provisional allowance is given in the computation under a prescribed formula (see OT14300).

The main rules concerning the allowance of expenditure and uplift are contained in:

OTA1975\S3 Expenditure other than expenditure on long term assets (see OT09025)
OTA75\S4 Expenditure on long term assets (see OT11100)
OTA83\S3 Expenditure on long term assets (see OT11025)
OTA75\S5 Abortive exploration expenditure (see OT13950)
OTA75\S5A Exploration and appraisal expenditure (see OT13975)
OTA75\S5B Research expenditure (see OT14100)
OTA75\SCH5 Field claims by the Responsible Person on behalf of himself and all other participators in that field.
OTA75\SCH6 Field claims by individual participators in respect of their own costs on that field when for reasons of trade secrecy it would be unreasonable to provide details to the Responsible Person.
OTA75\SCH7 Claims by individual participators, in respect of abortive exploration expenditure incurred on or after 1 January 1960 and before 16 March 1983 and exploration and appraisal expenditure incurred after 15 March 1983 and before 16 March 1993 (subject to transitional arrangements) against fields in which they are participators. Costs incurred by associated companies can be claimed under Schedule 7. From 17 March 1987 certain expenditure incurred by a participator on research falls to be dealt with by claim under Schedule 7 (see FA87\SCH13). (As regards the position post FA93 (see OT03520).

The basic rules covering the making of expenditure claims, decisions thereon, appeals, etc are set out in Schedule 5 with the main provisions then being applied to Schedules 6 and 7.

Expenditure is allowable only once. OTA75\S3(3) provides that expenditure is not allowable under Section 3 if, or to the extent that, it has been allowed for any other oil field under Schedules 5 or 6 or in connection with any oil field under Schedule 7.

Claims under Schedule 6 are restricted to field costs which the participator itself incurs, on the grounds of trade secrecy.