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HMRC internal manual

Oil Taxation Manual

Transferable Tax History - Tracking following cessation of production

If a field is purchased with TTH, and there is tariff generating infrastructure associated with that asset which continues to be used after cessation of production from the field, the tariff income and expenses will be included in the calculation of the tracked profits.

Where the field is decommissioned at a time where the pipeline is still operational there will be a “moving activation point” with the profits/losses associated with the pipeline after cessation of production being added onto the tracked profits, and in effect year on year moving the activation point. This would be the same for any post cessation expenses. An example of this is shown below:
 

Year Profits Tariff Income Total Profits TNTP Decom Cumulative Decom (CD) CD-TNTP Activated TTH
1 900 100 1,000 1,000     (1,000)  
2 900 100 1,000 2,000     (2,000)  
3 1,400 100 1,500 3,500     (3,500)  
4 1,400 100 1,500 5,000     (5,000)  
5   100 100 5,100 1,000 1,000 (4,100)  
6   100 100 5,200 3,000 4,000 (1,200)  
7   100 100 5,300 2,500 6,500 1,200 1,200
8   150 150 5,450   6,500 1,050 1,050
9   150 150 5,600   6,500 900 900
10   200 200 5,800   6,500 700 700
11       5,800 1,200 7,700 1,900 1,900

Where TTH has been activated but not claimed and further tracked profits are generated by the field the activated TTH should be reduced accordingly by “deactivating” the activated TTH by the amount of any additional profits.