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HMRC internal manual

Oil Taxation Manual

HM Revenue & Customs
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PRT: supplement - bringing about the commencement of winning or transporting oil


OTA75\S3(5)(a) allows supplement on expenditure incurred for the purpose of bringing about

  • the commencement of winning oil from the field or
  • the commencement of the transporting of oil won from a field to the UK (or, for claim periods ending after 27 November 1991, to another country)

in a period up to and including the net profit period, see OT12650.

In effect, virtually all the development costs up to production start-up are likely to qualify for supplement including

  • searching expenditure, see OT12150 (and generally on field expenditure allowable under OTA75\S3(1)(a), see OT09050)
  • licence premiums allowable under OTA75\S3(1)(b) (see OT09075) (but where a licence on a block adjacent to the field is surrendered then re-acquired, LB Oil & Gas takes the view that the licence premium on re-acquisition is allowable but not supplement, since the obtaining of a fresh licence could not affect the potential of the field to produce)
  • platform costs (e.g. construction, hook-up and commissioning, see OT12200 for further discussion of some of the issues)
  • pipelines, dedicated transport tankers etc.