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HMRC internal manual

Oil Taxation Manual

From
HM Revenue & Customs
Updated
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Non-Residents Working on the UK Continental Shelf: Income from rights - General Background

Since April 1973 the scope of UK tax liability has been extended for income from “exploration or exploitation rights” so that:

  1. for the purposes of income tax or corporation tax such income is treated as profits or gains from property in the UK; and
  2. for the purposes of corporation tax such income is treated as profits or gains of a trade carried on in the UK through a branch or agency.

Double Taxation Agreements may affect the scope of charge to UK tax (see OT41500+).

Under CTA09\S1313(3) & ITTOIA05\S874”exploration or exploitation rights” are:

  1. Rights to assets to be produced by activities carried on in connection with the exploration or exploitation of so much of the seabed and sub-soil and their natural resources as is situated in the UK or a designated area;
  2. Interests in or to the benefit of assets within (a) above.

Profits from such “exploration or exploitation rights” are treated for the purposes of income tax and corporation tax as arising from property in the UK under CTA09\S1313(1) & ITTOIA05\S874(1).

Profits from “exploration or exploitation rights” are treated for the purposes of corporation tax as profits of a trade carried on in the UK through a branch or agency, even if that income does not accrue in the course of a trade, under CTA09\S1313(2).

Double Taxation Agreements with particular countries have differing definitions of the UK - see OT41510.