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HMRC internal manual

Oil Taxation Manual

Non-residents working on the UK continental shelf: recovery of tax: apportionment of tax

When attributing unpaid tax to one of two or more licensed areas in which activities were performed, the tax should be determined in accordance with the proportion of the total profits attributable to that particular licensed area - TMA70\S77C(4).

The amount for each licensed area is to be computed as if, for the purposes of separate assessment, any receipts, expenses, allowances and deductions taken into account for the actual assessment are allocated as appears to HMRC to be just and reasonable in the circumstances.

If in the case of a defaulting contractor detailed computations have been submitted by the non-resident enabling profits attributable to each licensed area to be specifically identified and determined, then the appropriate figures are used.

Where unitisation has occurred it will be assumed in the absence of evidence to the contrary that the payment reported by the operator in a TMA70\S77I return is attributable to the unitised field. The unpaid tax will therefore be apportioned accordingly between the 2 licences (for example by reference to the area in square kilometres covered by each licence). If, however, there is evidence in the return, for example, that the work carried out related exclusively to one licensed area only within that field, HMRC will proceed on the basis that no apportionment is necessary. The warning letter stage (see OT45420) will provide the licence holders with the opportunity of clarification of this issue, as a safeguard against incorrect assumptions regarding attribution.