Expenditure incurred can be deducted in a PRT assessment only if LB O&G has agreed the claim before the assessment is made. To compensate for this, a provisional allowance is provided which is recovered in the next-but-one chargeable period (OTA 1975, s. 2(9)(a)). The provisional allowance for a chargeable period is an amount equal to:

five per cent of the price received or market value of the disposals and appropriations of oil in the period as in the participators returns; less

the field expenditure (excluding uplift) incurred in the period and allowed for the period (if any).

If this produces a negative figure the provisional allowance is nil.

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