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HMRC internal manual

Oil Taxation Manual

Corporation Tax Ring Fence: Currency differences and valuation of oil - Possible scenarios

There are three possible general scenarios.

Scenario 1: PRT and CT sales conversion bases are the same

As the PRT market value (MV) is computed on the same basis as the CT sales figure, there can be a straight substitution of MV for sales proceeds. Any exchange differences will be dealt with on the normal basis through the profit and loss account.

Scenario 2: PRT and CT receipts conversion bases are the same

The MV mirrors the receipts and will therefore to some extent take into account the exchange differences between the accounts figures for sales and receipts. Consequently, if the CTA10\S280 + adjustment is made solely on the sales figures there will be a certain amount of double counting of those differences. MV is therefore substituted for the sales figures as adjusted for exchange differences, thereby dealing with the differences only once.

Scenario 3: PRT conversion basis differs from CT sales and CT receipts conversion bases

Here it is not possible to generalise about the amount of any possible double counting of exchange differences. The treatment adopted is to adjust sales only (as in Scenario 1) on the basis that, taking one year with another, any double counting should even out. HMRC is however prepared to make the adjustment in Scenario 2 if the company can specifically identify all of the exchange differences involved.