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HMRC internal manual

Oil Taxation Manual

HM Revenue & Customs
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PRT: administration: notice of variation


If within four years commencing with the date on which the notice of decision on a claim under Schedule 5 was given to the Responsible Person for an oil field, it appears to the Inspector (acting for the Board) that the expenditure allowed or the expenditure allowed as qualifying for supplement, or the rate at which supplement was allowed was incorrectly stated in the notice of decision, then a notice of variation is to be served within that four year period on the Responsible Person stating the amount the Inspector considers to be correct.

The Responsible Person may appeal to the First-tier Tribunal in writing against the Notice of Variation not more than 30 days after the date the notice was served on him, stating the grounds of his appeal. The appeal can be abandoned by notice in writing or the Notice of Variation withdrawn before it becomes effective. The same provisions as those for an appeal against a decision apply regarding settling of the appeal by agreement and the powers of the First-tier Tribunal to vary.

The Notice of Variation becomes effective after the expiry of the appeal period or, where an appeal has been made, when the Notice of Variation can no longer be altered by the First-tier Tribunal or any Court. There is also the opportunity to have the Notice reviewed by another officer not involved with the case prior to the appeal being heard by the First-tier Tribunal (ARTG1030 & 4000 et seq).

When the Notice of Variation becomes effective the amount of the original decision shall be reduced or increased, as the case may require, on the date on which the notice of the original decision on the claim was given and the relevant assessments amended accordingly.

If it is agreed by both the Inspector and the company that a particular variation should be made, and the company indicates that it does not propose to exercise its right of appeal, then the Inspector will amend any relevant assessment without waiting for the appeal period to expire. Where there is an underpayment, this practice gives the company an opportunity to pay the increased charge without further interest accruing; where there is an overpayment, the company can be repaid without delay

OTA75\SCH5\PARA9 is extended, with modifications, to Schedule 6 by OTA75\SCH6\PARA2. Additionally FA87\S67 extended the provisions of OTA 75\SCH5\PARA9 to Schedule 7 but only in relation to notices of decision given on or after 17 March 1987.

If the original claim was overstated due to careless inaccuracy the time limit for the making of a notice of variation is extended to six years (PARA9(2C)). If the original claim was overstated due to deliberate inaccuracy the time limit for the making of a notice of variation is extended to twenty years (PARA9(2C)).

Interaction - appeals and Notices of Variation

If after a decision has been made on a claim it is agreed that more of the expenditure claimed and/or more supplement should have been allowed additional relief can be given either on the determination of an appeal against the decision or by the issue of a notice of variation. LB Oil & Gas view is that the claims machinery should take precedence over the discretionary power in OTA75\SCH5\PARA9 as a means of giving additional relief with the result that a notice of variation will not usually be issued where the appeal route is available. Where however a notice of variation is appropriate there is no bar to giving additional relief by this route notwithstanding that an appeal on the same point is unsettled.

The chargeable period in which the additional relief is given will be decided by the procedure followed. Where expenditure and/or supplement is allowed on appeal relief is given in the first assessment made following the date of appeal (OTA75\SCH5\PARA6). Where a notice of variation becomes effective, assessments will be made or amended as though the revised “relevant amounts” had been shown on the original notice of decision (OTA75\SCH5\PARA9).

Where a decision has been the subject of a notice of variation and a Cross Field Allowance claim has been, or could be made see OT13060.