PRT: Safeguard - Adjusted Profit
The adjusted profit is arrived at by taking the assessable profit before any reduction for oil allowance or loss, other than a loss of the chargeable period, and adding back
- Schedule 5 and Schedule 6 expenditure allowed and which qualified for supplement
- supplement on this qualifying expenditure
- abortive exploration, exploration & appraisal expenditure and research expenditure
- unrelievable field losses
- cross field allowance.
But any 5% Provisional Allowance given is not added back.
By virtue of FA83\Sch8\Para12(3) where an excess qualifying receipt as defined in FA83\Sch8\Para10 has been included in the computation of profit then that amount should be deducted from the expenditure and supplement which would otherwise be added back in the calculation of adjusted profit. If the receipts exceed the total of all sums to be added back any difference is treated as a negative amount and reduces the adjusted profit.
On excess qualifying receipts generally, see OT13860.
Where an adjustment is made restricting the allowance of supplement following the disposal of a chargeable asset (see OT15300), OTA83\S7(6)(b) ensures that an equivalent amount of supplement which otherwise would have been ‘added back’ is not adjusted.
See OT17700 on the potentially problematic interaction of supplement and safeguard.