D7.901 Oil extraction—Introduction and key definitions

Corporate tax
Corporate tax | Commentary

D7.901 Oil extraction—Introduction and key definitions

Corporate tax | Commentary

Division D7.9     Oil extraction and related activities

Reviewed by

BA (Hons), CTA

Tax Manager, BG Group plc

For updates affecting this Division please see Part D0 Updates

Oil extraction and related activities—Overview

D7.901 Oil extraction—Introduction and key definitions

The Oil Taxation Act 1975 introduced a number of amendments to the Taxes Acts in their application to trades comprising oil extraction activities, or the acquisition, enjoyment or exploitation of oil rights in the UK1, its territorial waters or any designated area2 of the continental shelf; see D7.902–D7.918. In general these rules apply to all trades comprising oil extraction, with the exception of (for 2013/14 onwards) the calculation of oil extraction profits which are done on the cash basis3 (see B2.112).

Since the Oil Taxation Act 1975 there have been numerous changes to legislation affecting the taxation of oil extraction and related activities. In particular the Oil Taxation Act 1983 made substantial amendments to the rules governing the deduction of expenditure and charging of receipts for the purposes of petroleum revenue tax4. In recent years, HMSO have published as a single volume 'The Oil Taxation Acts', which contains the principal statutory provisions relating to petroleum revenue tax and the 'ring fence' income tax and corporation tax provisions.

The corporation tax provisions relating to oil extraction activities are now consolidated in CTA 2010, Pt 8 (for corporation tax purposes) and ITTOIA 2005, Pt 2 Ch 16A (for income tax purposes). Note, the provisions in ITTOIA 2005, Pt 2 Ch 16A do not apply to the cash basis

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