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HMRC internal manual

Oil Taxation Manual

Transferable Tax History - Tracking of multiple TTH assets

When a company buys multiple assets with TTH attached they will be required to track the profits for each asset separately. For example:

Company A purchases 10% of Asset 1 with TTH attached in April 2019 and 20% of Asset 2 with TTH attached in September 2019, both from Company B.

Company A will be required to track the profits of the two assets separately. The maximum amount of TTH transferred for each asset is subject to the TTH cap (see OT62000). Both the TTH amount and tracking must be kept separate.

This is also the case where multiple assets are purchased in one transaction. For example, if Company A buys a cluster of fields from Company B including 5% of Asset 1 , 10% of Asset 2 and 20% of Asset 3.

The amount of TTH transferred for each asset will be subject to individual caps.  The TTH will then be allocated to each asset individually.

The profits for each asset also need to be tracked separately and cannot be pooled together, this means that the decommissioning costs of Asset 1 will be compared to the tracked profit of Asset 1 to determine how much TTH is activated.  For example say Asset 1 has TTH of 8,000, Asset 2 has TTH of 4,000 and Asset 3 has TTH of 2,000.

  Tracked Profit    
Year Asset 1 Asset 2 Asset 3
1 3,000 4,000 4,500
2 1,500 3,800 4,000
3 300 3,600 3,800
4 300 3,600 3,800
5 (10,000) Decom 3,000 2,800

In year 4 Assets 2 and 3 are still producing however Asset 1 has ceased production and has decommissioning expenditure of 10,000. Total net tracked profits of Asset 1 were 4,800 meaning total activated TTH for Asset 1 in year 4 is 5,200.   

This activated TTH of Asset 1 would be made available for the company to use as per the loss relief rules.