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HMRC internal manual

Oil Taxation Manual

HM Revenue & Customs
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Non-Residents Working on the UK Continental Shelf: Introduction - Outline of Legislation

The main rule is that profits from exploration and exploitation activities carried on in designated areas or rights relating to those areas are treated as profits arising in the UK or gains on the disposal of assets situated in the UK (see OT40600+).

Corporation tax

Profits or gains of non-residents from such activities are regarded as arising from a trade carried on through a branch or agency in the UK (whether or not that is in fact the case) which brings them within the charge to UK tax.

Some of the existing capital gains roll-over provisions for transfers within groups are extended to certain transfers involving non-resident companies, which would otherwise have resulted in a chargeable gain (see OT30450).

Employment income

Duties performed in the designated areas in connection with exploration or exploitation activities are to be treated as though they had been performed in the UK itself (see ITEPA03\S41).

Information and collection

Provisions are included to overcome the information and collection difficulties that may arise through the extension of the charge to UK tax to non-residents who may have no physical presence in the UK.

An HMRC officer may seek such information from an exploration or production licensee about transactions connected with his licence areas (for example payments to contractors and their subcontractors) which may give rise to liabilities under CTA09\S1313, ITTOIA05\S874 and TCGA92\S276 (see OT44500+). Unpaid tax assessed on a non-resident under those provisions may be recovered from the relevant licensee (see OT45001). However, the Board is empowered to issue a certificate to a licensee exempting the company from such recovery powers if they are satisfied that the non-resident enterprise will comply with its tax responsibilities (see OT45501+).