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HMRC internal manual

Oil Taxation Manual

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HM Revenue & Customs
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Non-residents working on the UK continental shelf: computation of profits: companies

General charge

Companies registered and resident abroad are brought within the charge to UK tax by virtue of CTA09\S1313. Profits from ‘exploration or exploitation activities’ (defined in CTA2009\S1313(3)) and income from ‘exploration or exploitation rights’ (defined in CTA2009\S1313(3)) are treated for the purposes of corporation tax as profits of a trade carried on through a UK permanent establishment (CTA209\S1313(2) and therefore chargeable to corporation tax (CTA2009\S5).

Application of Double Taxation Agreements

Where a company liable to corporation tax under CTA2009\S1313 is a resident of a country with which the UK has a Double Taxation Agreement, the business profits article in the treaty (see DT1726) will set out the rules for calculating the business profits. Where the treaty also contains an offshore activities article (see OT41530), then the calculation of business profits is modified by the terms of the offshore activities article.

No treaty protection

The methods described in DT1726 are also applied as a matter of practice in calculating the profits attributable to a deemed permanent establishment of a company resident in a country with which the UK does not have a Double Taxation Agreement.

Actual permanent establishment

A non-resident company that carries on ‘exploration or exploitation activities’ through an actual permanent establishment in the UK is charged to UK tax by virtue of CTA2010\S1141 and there is no need to use CTA2009\S1313. The methods described at DT1726 for calculating the profits attributable to a deemed permanent establishment of a company with treaty protection are also applied in practice to the calculation of the profits attributable to an actual permanent establishment.