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HMRC internal manual

Oil Taxation Manual

Non-Residents Working on the UK Continental Shelf: Introduction - Territorial Sea and Continental Shelf

The UK territorial sea extends for a distance of 12 miles off-shore. The UK continental shelf broadly runs from the outer edge of the territorial sea to a median line mutually agreed between the UK and neighbouring countries.

The continental shelf outside the territorial sea is not part of the UK but areas may be designated by Orders in Council as areas in which the UK may exercise rights of exploration or exploitation of natural resources (Section 1 (7) the Continental Shelf Act 1964). These rights have been exercised over large “designated areas” (see OT40650).

Since 6 April 1973, the territorial sea has been deemed to be part of the UK for all the purposes of Income Tax, Capital Gains Tax and Corporation Tax. UK tax jurisdiction over the continental shelf, however, is limited to profits from activities and rights connected with the exploration or exploitation of the natural resources of the seabed and subsoil of the designated areas (CTA09\S1313(3), ITTOIA05\S874, ITEPA03\S41(2) and TCGA92\S276).