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HMRC internal manual

Oil Taxation Manual

PRT: tariff and disposal receipts - definition of disposal receipts


Disposal receipts liable to PRT for a chargeable period are defined at OTA83\S7(2) as the aggregate of the amount or value of any consideration received or receivable by a participator which is attributable to that field (see OT15150) in respect of the disposal in that chargeable period of a qualifying asset (see OT15100) or an interest in such an asset.

With regard to the term ‘value of any consideration’, see OT15180.

Exclusion of Interest and Payments to acquire Oil Rights

OTA83\S7(5) excludes from the definition of disposal receipts any amount in relation to the payer that is

  1. expenditure in respect of interest or any other pecuniary obligation incurred in obtaining a loan or any other form of credit or
  2. made for the purpose of obtaining a direct or indirect interest in oil won or to be won from a field.

Any apportionment required should be made on a just and reasonable basis.

Other Apportionment

Where the exclusion rules in OTA83\S7(5) do not apply, but nonetheless part of the consideration includes an unquantified element which is not a chargeable disposal receipt, OTA83\Sch2\Para3 provides for a just and reasonable apportionment of the sum in order to identify the appropriate chargeable amount.

Exclusion of Assets sold on Field Transfer

FA80\Sch17\Para19 provides that sums received in respect of the disposal of assets are not chargeable disposal receipts if the assets are disposed of by the old participator to the new participator as part of the transfer of a field interest, see OT18020.

Field Redetermination

Generally, redeterminations of UK fields do not give rise to disposal receipts, see OT18290. Disposal receipts are however chargeable where there is a redetermination of a transmedian field (see OT13510) and any repayment, credit or set-off of expenditure is received by the participators in respect of expenditure incurred in acquiring, bringing into existence or enhancing the value of a qualifying asset or an interest in a qualifying asset (OTA83\S7(3)).

Brought-in Assets

The chargeable amount of the receipts on the disposal of a ‘brought-in asset’ (see OT11500) is the proportion corresponding to the proportion of the expenditure that qualified for relief (OTA83\Sch2\Para9).

Assets used for Deballasting

If the asset was partly used for deballasting, the disposal receipt is reduced by a proportion corresponding to the proportion by which the allowable expenditure was reduced for deballasting (OTA83\Sch2\Para10).

Assets used for Tax-Exempt Tariffing

OTA83\S7A inserted by FA04\Sch37\Para5(4) provides for a reduction of the amount of any disposal receipts where an asset was used for tax-exempt tariffing in the 6 year period ending with the date of disposal (OT15250).

Exempt Gas Fields

The definition of a qualifying asset in OTA83\S8 is modified by OTA83\Sch2\Para4 so that disposal receipts which are attributable to an exempt gas field (see OT13260) in respect of non-mobile assets are chargeable to PRT.

Foreign Field Assets

Where non-mobile assets owned by a participator in a foreign field (see OT13510) are situated in the UK or on the UK Continental Shelf, any disposal receipts attributable to or in connection with UK use of are likewise chargeable to PRT.