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HMRC internal manual

Oil Taxation Manual

Non-residents working on the UK continental shelf: recovery of tax: review of suitability for recovery of tax

Tax covered by exemption certificates

The first step in deciding whether the machinery in TMA70\S77C should be used to recover unpaid tax from a licence holder is a check that no part of the tax is covered by an exemption certificate issued under TMA70\S77F. Such tax cannot be recovered from a licence holder (see OT45100).

Estimated assessments

Although the licence holder has no specific right of appeal against a notice served under OT45050, it is nevertheless important that HMRC should be seen to be only seeking to recover tax that on all the available evidence is properly due. Care is therefore exercised when making estimated assessments or determinations of tax liability in the absence of a return to ensure that the figure used represents a fair estimate of the profit element. This may be, for example, by reference to known receipts reported in TMA70\S77I returns or profits for previous years.

Evidence of activities

It is necessary to ensure that there is evidence that the non-resident contractor carried on activities in the UK Continental Shelf in connection with the exploration or exploitation of UK oil and gas resources in the relevant period.

This might include (but is not limited to):

  • returns under TMA70\S77I;
  • the trade press;
  • information provided by other HMRC sources;
  • other particulars in the contractor’s file.

If there is no evidence to show that the non-resident contractor carried on activities within the charge to tax under CTA2009\S1313 or ITTOIA2005\S874 in the relevant period unpaid tax may not be recovered from the licence holder.