Commentary

B3.711 Oil and gas exploration and appraisal

Business tax
Business tax | Commentary

B3.711 Oil and gas exploration and appraisal

Business tax | Commentary

B3.711 Oil and gas exploration and appraisal

'Oil and gas exploration and appraisal' is defined as activities carried out for the purpose of:

  1.  

    (a)     searching for petroleum anywhere in an area; or

  2.  

    (b)     ascertaining the extent or characteristics of any petroleum bearing area, or what the reserves of any such area are, so that it may be determined whether the petroleum is suitable for commercial exploitation1

For these purposes, 'petroleum' has the same meaning as in the Petroleum Act 1998 s 12.

These activities are within the definition of R&D for capital allowance purposes3, although they are not included in normal accounting practice (FRS 102, formerly SSAP 13)4 in considering relief for revenue expenditure (see B2.467) or for special R&D credits (see Division D1.4).

Certain special questions of tax law that arise in connection with exploration for and development of oil and natural gas

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