Legalize / United Kingdom / Public General Act

Finance Act 2015

Type Public General Act

Publication 2015-03-26

Last updated 2023-07-11

State In force

Department Statute Law Database

Source legislation.gov.uk

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(332A) (1) This Chapter sets out how relief for certain expenditure incurred in relation to a qualifying oil field is given by way of reduction of a company's adjusted ring fence profits. (2) The Chapter includes provision about— (a) the oil fields that are qualifying oil fields (section 332B); (b) the expenditure that is investment expenditure (section 332BA); (c) the generation of allowance by the incurring of relievable investment expenditure in relation to a qualifying oil field (sections 332C and 332CA); (d) restrictions on the expenditure that is relievable (sections 332D to 332DC); (e) how allowance is activated by relevant income from the same oil field (sections 332F to 332FC and 332H to 332HB) in order to be available for reducing adjusted ring fence profits (sections 332E and 332EA); (f) the division of an accounting period into reference periods where a company has different shares of the equity in a qualifying oil field at different times in the period (section 332G); (g) the transfer of allowance where shares of the equity in a qualifying oil field are disposed of (sections 332I to 332IB). (3) For provision about the conversion of field allowance under Chapter 7 (as it had effect before 1 April 2015) into allowance under this Chapter, see paragraphs 7 and 8 of Schedule 12 to FA 2015. (332B) In this Chapter “qualifying oil field” means an oil field that is not wholly or partly included in a cluster area (see section 356JD). (332BA) (1) For the purposes of this Chapter, expenditure incurred by a company is “investment” expenditure only if it is— (a) capital expenditure, or (b) expenditure of such other description as may be prescribed by the Treasury by regulations. (2) Regulations under subsection (1)(b) may provide for any of the provisions of the regulations to have effect in relation to expenditure incurred before the regulations are made. (3) But subsection (2) does not apply to any provision of amending or revoking regulations which has the effect that expenditure of any description ceases to be investment expenditure. (4) Regulations under subsection (1)(b) may— (a) make different provision for different purposes; (b) make transitional provision and savings. (332C) (1) Subsection (2) applies where a company— (a) is a participator in a qualifying oil field, and (b) incurs any relievable investment expenditure on or after 1 April 2015 in relation to the oil field. (2) The company is to hold an amount of allowance equal to 62.5% of the amount of the expenditure. Allowance held under this Chapter is called “investment allowance”. (3) For the purposes of this section investment expenditure incurred by a company is “relievable” only if, and so far as, it is incurred for the purposes of oil-related activities (see section 274). (4) Subsections (1) to (3) are subject to— (a) section 332D (which prevents expenditure on the acquisition of an asset from being relievable in certain circumstances), (b) section 332DA (which restricts relievable expenditure in relation to an oil field that previously qualified for a field allowance under Chapter 7 as a new oil field), (c) section 332DB (which restricts relievable expenditure in relation to a project by reference to which an oil field previously qualified for a field allowance under Chapter 7 as an additionally-developed oil field), and (d) section 332DC (which prevents certain expenditure from being relievable if it relates to an oil field in respect of which onshore allowance may be obtained under Chapter 8). (5) Investment allowance is said in this Chapter to be “generated” at the time when the investment expenditure is incurred (see section 332K) and is referred to as being generated— (a) “by” the company concerned; (b) “in” the qualifying oil field concerned. (6) Where— (a) investment expenditure is incurred only partly for the purposes of oil-related activities, or (b) the oil-related activities for the purposes of which investment expenditure is incurred are carried on only partly in relation to a particular qualifying oil field, the expenditure is to be attributed to the activities or field concerned on a just and reasonable basis. (332CA) (1) This section applies to expenditure incurred by a company on or after 1 April 2015 for the purposes of oil-related activities if or to the extent that the following conditions are met. (2) The conditions are— (a) that the expenditure was in respect of an area, (b) that, at the time the expenditure was incurred, the area had not been determined under Schedule 1 to OTA 1975 to be an oil field, (c) that the area is subsequently determined under that Schedule to be an oil field, and (d) that the company is a licensee in the oil field. (3) Where this section applies in relation to an amount of expenditure, that amount is treated for the purposes of this Chapter as incurred by the company— (a) in relation to the oil field, and (b) at the time when the area is determined under Schedule 1 to OTA 1975 to be an oil field. (332D) (1) Investment expenditure incurred by a company (“the acquiring company”) on the acquisition of an asset is not relievable expenditure for the purposes of section 332C if either of the disqualifying conditions in this section applies to the asset. (2) The first disqualifying condition is that investment expenditure incurred before the acquisition, by the acquiring company or another company, in acquiring, bringing into existence or enhancing the value of the asset was relievable under section 332C. (3) The second disqualifying condition is that— (a) the asset— (i) is the whole or part of the equity in a qualifying oil field, or (ii) is acquired in connection with a transfer to the acquiring company of the whole or part of the equity in a qualifying oil field, (b) expenditure was incurred before the acquisition, by the acquiring company or another company, in acquiring, bringing into existence or enhancing the value of the asset, and (c) any of that expenditure— (i) related to the qualifying oil field, and (ii) would have been relievable under section 332C if this Chapter had been fully in force and had applied to expenditure incurred at that time. (4) For the purposes of subsection (3)(a)(ii) it does not matter whether the asset is acquired at the time of the transfer. (332DA) (1) This section applies to expenditure which— (a) is incurred by a company in relation to an oil field that was for the purposes of Chapter 7 a new oil field with an authorisation day before 1 January 2016, (b) would in the absence of this section be relievable under section 332C, and (c) is not excluded from this section by— (i) subsection (5) (material completion), (ii) subsection (7) (company without share of equity), or (iii) subsection (8) (additionally-developed oil fields). In the following provisions of this section, expenditure to which this section applies is referred to as “relevant expenditure”. (2) Relevant expenditure incurred by a company on any day (“the relevant day”) is not relievable expenditure for the purposes of section 332C except— (a) if immediately before the relevant day the cumulative total of relevant expenditure attributable to the company's share of the equity in the oil field (see subsection (3)) exceeds the relevant field threshold (see subsection (4)), or (b) to the extent that, in a case not within paragraph (a), the amount of relevant expenditure incurred on the relevant day, when added to that cumulative total, exceeds the relevant field threshold. (3) The “cumulative total of relevant expenditure attributable to the company's share of the equity in the oil field” at any time is the total amount of relevant expenditure which is incurred by the company during the period beginning with the start date and ending with that time, but this is subject to sections 332IA(3) and 332IB(4) (which relate to the disposal and acquisition of equity in an oil field). In this subsection “the start date” means 1 April 2015 or, if later, the authorisation day (within the meaning of Chapter 7) for the field. (4) The “relevant field threshold” is an amount given by the formula— $$160 % × F × E$where—F is the total field allowance for the oil field, as originally determined under section 356 for the purposes of Chapter 7;E is the company's share of the equity in the oil field at the end of the relevant day.$ (5) This section does not apply to expenditure which is incurred on or after the day determined by the Secretary of State as that on which the relevant project was materially completed. (6) “The relevant project” means— (a) in a case that fell within section 351(1)(a), the development described in the field development plan for the field, and (b) in a case that fell within section 351(1)(b) or (c), the programme of development for the field. (7) This section does not apply to expenditure incurred by a company if— (a) at the time when the expenditure is incurred, the company is not a licensee in the oil field, and (b) the expenditure is incurred in making an asset available in a way which gives rise to tariff receipts (as defined by section 15(3) of the Oil Taxation Act 1983) or tax-exempt tariffing receipts (as defined by section 6A(2) of that Act). (8) This section does not apply to expenditure to which section 332DB applies. (332DB) (1) This section applies to expenditure which— (a) is incurred by a company in relation to a project by reference to which an oil field was immediately before 1 April 2015 an additionally-developed oil field for the purposes of Chapter 7, (b) would in the absence of this section be relievable under section 332C, and (c) is not excluded from this section by subsection (5) (material completion) or subsection (6) (company without share of project-related reserves). In the following provisions of this section, expenditure to which this section applies is referred to as “relevant expenditure”. (2) Relevant expenditure incurred by a company in relation to a project on any day (“the relevant day”) is not relievable expenditure for the purposes of section 332C except— (a) if immediately before the relevant day the cumulative total of relevant expenditure attributable to the company's share of project-related reserves (see subsection (3)) exceeds the relevant project threshold (see subsection (4)), or (b) to the extent that, in a case not within paragraph (a), the amount of relevant expenditure incurred on the relevant day, when added to that cumulative total, exceeds the relevant project threshold. (3) The “cumulative total of relevant expenditure attributable to the company's share of project-related reserves” at any time is the total amount of relevant expenditure which is incurred by the company during the period beginning with 1 April 2015 and ending with that time, but this is subject to sections 332IA(5) and 332IB(6) (which relate to the disposal and acquisition of shares in project-related reserves). (4) The “relevant project threshold” is an amount given by the formula— $$160 % × F × E$where—F is the total field allowance for the oil field in relation to the project, as originally determined under section 356A for the purposes of Chapter 7;E is the company's share of project-related reserves at the end of the relevant day.$ (5) This section does not apply to expenditure which is incurred on or after the day determined by the Secretary of State as that on which the project was materially completed. (6) This section does not apply to expenditure incurred by a company if— (a) the company does not, at the time when the expenditure is incurred, hold a share of project-related reserves, and (b) the expenditure is incurred in making an asset available in a way which gives rise to tariff receipts (as defined by section 15(3) of the Oil Taxation Act 1983) or tax-exempt tariffing receipts (as defined by section 6A(2) of that Act). (7) In this section “project-related reserves”, in relation to a project and an oil field, means the additional reserves of oil that the oil field has as a result of the project. (332DC) (1) This section applies to investment expenditure which is incurred— (a) for the purposes of onshore oil-related activities in respect of an oil field which is a qualifying site within the meaning of section 356C (generation of onshore allowance), and (b) on a day at the beginning of which neither of the disqualifying conditions in section 356CA (disqualifying conditions for section 356C(4)(b)) is met. (2) Expenditure to which this section applies is not relievable expenditure for the purposes of section 332C. (3) In this section “onshore oil-related activities” has the same meaning as in Chapter 8 (see section 356BA). (332E) (1) A company's adjusted ring fence profits for an accounting period are to be reduced by the cumulative total amount of activated allowance for the accounting period (but are not to be reduced below zero). (2) In relation to a company and an accounting period, the “cumulative total amount of activated allowance” is— $$A + C$where—A is the total of any amounts of activated allowance the company has, for any qualifying oil fields, for the accounting period (see section 332F(2)) or for reference periods within the accounting period (see section 332H(1)), andC is any amount carried forward to the period under section 332EA.$ (332EA) (1) This section applies where, in the case of a company and an accounting period, the cumulative total amount of activated allowance (see section 332E(2)) is greater than the adjusted ring fence profits. (2) The difference is carried forward to the next accounting period. (332F) (1) This section applies where— (a) for the whole or part of an accounting period, a company is a licensee in a qualifying oil field, (b) the accounting period is not divided into reference periods (see section 332G), (c) the company holds, for the accounting period and the qualifying oil field, a closing balance of unactivated allowance (see section 332FA) which is greater than zero, and (d) the company has relevant income from the qualifying oil field for the accounting period. (2) The amount of activated allowance the company has for that accounting period and that qualifying oil field is the smallest of— (a) the closing balance of unactivated allowance held for the accounting period and the oil field; (b) the company's relevant income from that oil field for that accounting period; (c) in a case where section 332FB applies, the relevant activation limit for the accounting period and the oil field (see subsection (2) of that section). (3) In this Chapter “relevant income”, in relation to a qualifying oil field and an accounting period of a company, means production income of the company from any oil extraction activities carried on in that oil field that is taken into account in calculating the company's adjusted ring fence profits for the accounting period. (332FA) The closing balance of unactivated allowance held by a company for an accounting period and a qualifying oil field is— $$P + Q$where—P is the amount of investment allowance generated by the company in the qualifying oil field in the accounting period (including any amount treated under section 332IB(1) as generated by the company in that field in that accounting period);Q is any amount carried forward from an immediately preceding accounting period under section 332FC(1) or from an immediately preceding reference period under section 332HB(1).$ (332FB) (1) This section applies to a company for an accounting period in relation to an oil field if— (a) immediately before 1 April 2015 the oil field was an additionally-developed oil field for the purposes of Chapter 7 as a result of a project that fell within section 349A(1), and (b) the project is not an excluded project (see subsection (3)). (2) For the purposes of section 332F(2)(c), the “relevant activation limit” for the accounting period and the oil field is the amount that would be the closing balance of unactivated allowance held by the company for the accounting period if paragraph 7(3) of Schedule 12 to FA 2015 (conversion of unactivated field allowance) had never applied to any allowance attributable to the project. (3) The project is an “excluded” project if condition A or condition B is met. (4) Condition A is that— (a) a substantial amount of work has been done in relation to the project, and (b) the accounting period begins on or after the first day of the year of expected first production for the project. (5) The “year of expected first production” for the project is the year that was notified to the Secretary of State, on or before the day on which the project was authorised by the Secretary of State, as the calendar year in which additional reserves of oil were expected to be first won from the field as a result of the project. (6) Condition B is that the accounting period begins on or after the day determined under section 332DB(5) as that on which the project was materially completed. (332FC) (1) If, in the case of an accounting period of a company and a qualifying oil field, the amount given by subsection (2) is greater than zero, that amount is treated as investment allowance held by the company for that oil field for the next period (and is treated as held with effect from the beginning of that period). (2) The amount is— $$U − A − T$where—U is the closing balance of unactivated allowance held for the accounting period and the qualifying oil field (see section 332FA);A is the amount of activated allowance that the company has for the accounting period and the qualifying oil field (see section 332F(2));T is any amount that is required by section 332IA(1) (reduction of allowance if equity disposed of) to be deducted in connection with a disposal or disposals made on the day following the end of the accounting period.$ (3) If the accounting period is followed by a reference period of the company belonging to that qualifying oil field (see section 332G), “the next period” means that period. (4) If subsection (3) does not apply “the next period” means the next accounting period of the company. (332G) (1) This section applies where— (a) a company is a licensee in a qualifying oil field for the whole or part of an accounting period, and (b) the company has different shares of the equity in the field on different days in the accounting period. (2) For the purposes of this Chapter, the accounting period is to be divided into as many consecutive periods (called “reference periods”) as are necessary to secure that— (a) a reference period begins with the first day of the accounting period, (b) a reference period begins with the date of each disposal or acquisition of a share of the equity in the qualifying oil field that is made by the company in that accounting period (not including acquisitions or disposals made on the first day of the accounting period), and (c) a reference period ends with the last day of the accounting period. (3) Each such reference period “belongs to” the qualifying oil field concerned. (332H) (1) The amount (if any) of activated allowance that a company has for a qualifying oil field for a reference period is the smallest of the following— (a) the total amount of unactivated allowance that is attributable to the reference period and the oil field (see section 332HA); (b) the company's relevant income from the oil field for the reference period (see subsection (2)); (c) in a case where section 332FB (activation limit applying in case of certain fields) applies, the relevant activation limit for the reference period and the oil field (see subsection (3)). (2) The company's relevant income from the oil field for the reference period is so much of the company's relevant income from the oil field for the accounting period (see section 332F(3)) as arises in the reference period. (3) If section 332FB (activation limit applying in case of certain fields) applies in relation to the oil field for the accounting period in which the reference period falls, the “relevant activation limit” for the reference period and the oil field is the amount that would be the total amount of unactivated allowance attributable to the reference period and the oil field if paragraph 7(3) of Schedule 12 to FA 2015 (conversion of unactivated field allowance) had never applied to any allowance attributable to the project in question. (332HA) (1) For the purposes of section 332H(1)(a), the total amount of unactivated allowance attributable to a reference period and a qualifying oil field is— $$P + Q$where—P is the amount of allowance generated by the company in the reference period in the oil field (including any amount treated under section 332IB(1) as generated by the company in that oil field in that reference period);Q is the amount given by subsection (2) or (3).$ (2) Where the reference period is not immediately preceded by another reference period but is preceded by an accounting period of the company, Q is equal to the amount (if any) that is to be carried forward from that preceding accounting period under section 332FC(1). (3) Where the reference period is immediately preceded by another reference period, Q is equal to the amount (if any) carried forward under section 332HB(1). (332HB) (1) If, in the case of a reference period (“RP1”) of a company, the amount given by subsection (2) is greater than zero, that amount is treated as investment allowance held by the company for the qualifying oil field for the next period (and is treated as held with effect from the beginning of that period). (2) The amount is— $$U − A − T$where—U is the total amount of unactivated allowance attributable to the reference period and the qualifying oil field (see section 332HA(1));A is the amount of activated allowance that the company has for the qualifying oil field for the reference period (see section 332H(1));T is any amount that is required by section 332IA(1) (reduction of allowance if equity disposed of) to be deducted in connection with a disposal or disposals made on the day following the end of the reference period.$ (3) If RP1 is immediately followed by another reference period of the company (belonging to the same qualifying oil field), “the next period” means that reference period. (4) If subsection (3) does not apply, “the next period” means the next accounting period of the company. (332I) (1) Sections 332IA and 332IB apply where— (a) a company (“the transferor”) disposes of the whole or part of its share of the equity in a qualifying oil field, and (b) one or more of the following conditions is met. (2) The “unactivated allowance condition” is that immediately before the disposal the transferor holds unactivated investment allowance for the oil field. (3) The “section 332DA expenditure condition” is that— (a) immediately before the disposal the company has for the purposes of section 332DA (restriction where field qualified for field allowance as new field) a cumulative total of relevant expenditure attributable to its share of the equity in the oil field, and (b) the date of the disposal falls before any date determined under section 332DA(5) (material completion). (4) The “section 332DB expenditure condition” is that— (a) immediately before the disposal the company has for the purposes of section 332DB (restriction where project in additionally-developed field qualified for field allowance) a cumulative total of relevant expenditure attributable to its share of project-related reserves in relation to the oil field, and (b) the date of the disposal falls before any date determined under section 332DB(5) (material completion). (5) In sections 332IA and 332IB— (a) each of the companies to which a share of the equity is disposed of is referred to as “a transferee”, and (b) references to conditions are to be read in accordance with this section. (332IA) (1) If the unactivated allowance condition is met, the following amount is to be deducted in calculating the total amount of unactivated investment allowance attributable to the qualifying oil field concerned that is to be carried forward under section 332FC or 332HB from an accounting period or reference period of the transferor— $$( U − A ) × ( E1 − E2 ) E1$where—U and A are—in the case of a disposal made on the day following the end of an accounting period, the same as in section 332FC(2) (in its application to that period), orin the case of a disposal made on the day following the end of a reference period, the same as in section 332HB(2) (in its application to that period);E1 is the transferor's share of the equity in the qualifying oil field immediately before the disposal;E2 is the transferor's share of the equity in the qualifying oil field immediately after the disposal.$ (2) Subsection (3) applies if the section 332DA expenditure condition is met. (3) As from the beginning of the accounting period or reference period that begins with the day on which the disposal is made, the following amount is to be deducted in calculating for the purposes of section 332DA the cumulative total of relevant expenditure attributable to the transferor's share of the equity in the oil field— $$X × ( E1 − E2 ) E1$where—X is the cumulative total of relevant expenditure attributable to the transferor's share of the equity in the oil field (for the purposes of section 332DA), determined immediately before the disposal;E1 and E2 have the same meaning as in subsection (1).$ (4) Subsection (5) applies if the section 332DB expenditure condition is met. (5) As from the beginning of the accounting period or reference period that begins with the day on which the disposal is made, the following amount is to be deducted in calculating for the purposes of section 332DB the cumulative total of relevant expenditure attributable to the transferor's share of project-related reserves— $$X × ( E1 − E2 ) E1$where—X is the cumulative total of relevant expenditure attributable to the transferor's share of project-related reserves (for the purposes of section 332DB), determined immediately before the disposal;E1 is the transferor's share, immediately before the disposal, of the additional reserves of oil that the oil field has as a result of the project;E2 is the transferor's share, immediately after the disposal, of the additional reserves of oil that the oil field has as a result of the project.$ (332IB) (1) If the unactivated allowance condition is met, a transferee is treated as generating in the qualifying oil field concerned, at the beginning of the reference period or accounting period of the transferee that begins with the day on which the disposal is made, investment allowance of the amount given by subsection (2). (2) The amount is— $$R × E3 E1 − E2$where—R is the amount determined for the purposes of the deduction under section 332IA(1);E3 is the share of the equity in the qualifying oil field that the transferee has acquired from the transferor;E1 and E2 are the same as in section 332IA(1).$ (3) Subsection (4) applies if the section 332DA expenditure condition is met. (4) A transferee is treated for the purposes of section 332DA(3) as having incurred in respect of the qualifying oil field, at the beginning of the reference period or accounting period of the transferee that begins with the day on which the disposal is made, expenditure of the following amount— $$R × E3 ( E1 − E2 )$where—R is the amount determined for the purposes of the deduction under section 332IA(3);E1, E2 and E3 have the same meaning as in subsection (2).$ (5) Subsection (6) applies if the section 332DB expenditure condition is met. (6) A transferee is treated for the purposes of section 332DB(3) as having incurred in respect of the project, at the beginning of the reference period or accounting period of the transferee that begins with the day on which the disposal is made, expenditure of the following amount— $$R × E3 ( E1 − E2 )$where—R is the amount determined for the purposes of the deduction under section 332IA(5);E3 is the share of the project-related reserves that the transferee has acquired from the transferor;E1 and E2 have the same meaning as in section 332IA(5).$ (7) In subsection (6) “project-related reserves” means the additional reserves of oil that the oil field has as a result of the project. (332J) (1) This section applies if there is any alteration in a company's adjusted ring fence profits for an accounting period after this Chapter has effect in relation to the profits. (2) Any necessary adjustments to the operation of this Chapter (whether in relation to the profits or otherwise) are to be made (including any necessary adjustments to the effect of section 332E on the profits or to the calculation of the amount to be carried forward under section 332EA). (332JA) (1) The Treasury may by regulations substitute a different percentage for the percentage that is at any time specified in any of the following provisions— (a) section 332C(2) (calculation of allowance as a percentage of investment expenditure); (b) section 332DA(4) (calculation of relevant field threshold in relation to former new field); (c) section 332DB(4) (calculation of relevant project threshold in relation to former additionally-developed field). (2) Regulations under subsection (1) may include transitional provision. (332K) (1) Section 5 of CAA 2001 (when capital expenditure is incurred) applies for the purposes of this Chapter as for the purposes of that Act. (2) Regulations under section 332BA(1)(b) may make provision about when any expenditure that is investment expenditure as a result of the regulations is to be treated for the purposes of this Chapter as incurred. (3) This section is subject to section 332CA(3). (332KA) In this Chapter (except where otherwise specified)— - “adjusted ring fence profits”, in relation to a company and an accounting period, is to be read in accordance with section 330ZA; - “cumulative total amount of activated allowance” has the meaning given by section 332E(2); - “investment allowance” has the meaning given by section 332C(2); - “licence” has the same meaning as in Part 1 of OTA 1975 (see section 12(1) of that Act); - “licensee” has the same meaning as in Part 1 of OTA 1975; - “relevant income”, in relation to a qualifying oil field and an accounting period, has the meaning given by section 332F(3).

3

Chapter 7 (reduction of supplementary charge for eligible oil fields) is omitted.

PART 2 — Commencement and transitional provision

Interpretation

4

In this Part of this Schedule, the following expressions have the same meaning as in Chapter 7 of Part 8 of CTA 2010—

“additionally-developed oil field”;

“authorisation day”;

“eligible oil field”;

“new oil field”.

General rules for commencement

5

The amendment made by paragraph 2 has effect in relation to accounting periods ending on or after 1 April 2015.

6

(1) The amendment made by paragraph 3 has effect—

(a) in relation to projects authorised as mentioned in section 349A(1)(a) of CTA 2010 on or after 1 April 2015 in additionally-developed oil fields,

(b) in relation to new oil fields whose authorisation day is on or after 1 January 2016, and

(i) projects authorised as mentioned in section 349A(1)(a) of CTA 2010 before 1 April 2015 in additionally-developed oil fields, or

(ii) new oil fields whose authorisation day is before 1 January 2016,

in relation to accounting periods ending on or after 1 April 2015.

(2) But sub-paragraph (1)(c) is subject to paragraphs 7 and 8 (which relate to field allowance under Chapter 7 of Part 8 of CTA 2010).

Unactivated field allowance to become unactivated investment allowance

7

(1) This paragraph applies if, in the absence of this Schedule, a company would hold a field allowance for an eligible oil field as a result of section 337 or 347(2) of CTA 2010 immediately before the relevant date.

(2) “The relevant date” is—

(a) in relation to a new oil field whose authorisation day is on or before 1 April 2015, 1 April 2015;

(b) in relation to an additionally-developed oil field, 1 April 2015;

(c) in relation to a new oil field whose authorisation day is after 1 April 2015 but before 1 January 2016, the authorisation day.

(3) The unactivated amount of field allowance held by the company for the oil field immediately before the relevant date, as determined under section 339 of CTA 2010, is to be treated for the purposes of Chapter 6A of Part 8 of CTA 2010 (inserted by paragraph 2) as an amount of unactivated investment allowance generated by the company in the oil field in the relevant period.

(4) “The relevant period” is—

(a) the accounting period in which the relevant date falls, or

(b) where the company has different shares of the equity in the oil field on different days in that accounting period, the reference period (within the meaning of Chapter 6A of Part 8 of CTA 2010) in which the relevant date falls.

Activated field allowance to become activated investment allowance

8

(1) This paragraph applies if, in the absence of this Schedule, a company would under section 335 or 336 of CTA 2010 carry all or part of a pool of field allowances into the accounting period in which 1 April 2015 falls (“the commencement period”).

(2) The amount that would be carried into that accounting period is to be treated for the purposes of Chapter 6A of Part 8 of CTA 2010 (inserted by paragraph 2) as an amount of activated investment allowance carried forward to the commencement period under section 332EA of that Act.

SCHEDULE 13

PART 1 — Amendments of Part 8 of CTA 2010

1

Part 8 of CTA 2010 (oil activities) is amended in accordance with paragraphs 2 to 4.

Cluster area allowance

2

After Chapter 8 insert—

(356JC) (1) This Chapter sets out how relief for certain expenditure incurred in relation to a cluster area is given by way of reduction of a company's adjusted ring fence profits. (2) The Chapter includes provision about— (a) the determination of cluster areas (sections 356JD and 356JDA); (b) the meaning of investment expenditure (section 356JE); (c) the generation of allowance by the incurring of relievable investment expenditure in relation to a cluster area (section 356JF); (d) how allowance is activated by relevant income from the same cluster area (sections 356JH to 356JHB and 356JJ to 356JJB) in order to be available for reducing adjusted ring fence profits (sections 356JG and 356JGA); (e) the division of an accounting period into reference periods where a company has different shares of the equity in a licensed area or sub-area at different times in the period (section 356JI); (f) the transfer of allowance where shares of the equity in a licensed area or sub-area are disposed of (sections 356JK to 356JKB); (g) elections to treat allowance attributable to an unlicensed part of a cluster area as if it were attributable to a licensed area or sub-area in the cluster area (section 356JL). (356JD) (1) In this Part “cluster area” means an offshore area which the Secretary of State determines to be a cluster area. (2) A cluster area is treated as not including any previously authorised oil field (or any part of such an oil field) (see section 356JDA). (3) An area is “offshore” for the purposes of this section if the whole of it lies on the seaward side of the baselines from which the territorial sea of the United Kingdom is measured. (4) Before determining an area to be a cluster area the Secretary of State must— (a) give written notice of the proposed determination to every person who is a licensee in respect of a licensed area or sub-area which is wholly or partly included in the proposed cluster area and to any other licensee whose interests appear to the Secretary of State to be affected, and (b) publish a notice of the proposed determination on a website that is, and indicates that it is, kept by or on behalf of the Secretary of State. (5) The Secretary of State must consider any representations made in writing and within 30 days of the date of the publication of the notice under subsection (4)(b) (or, in the case of representations made by a person to whom notice is given under subsection (4)(a), within 30 days of receipt of the notice, if later). (6) A determination under this section— (a) has effect from the day on which it is published, (b) may be in any form the Secretary of State thinks appropriate, and (c) must assign to the cluster area an identifying number or other designation. (7) After making a determination the Secretary of State must— (a) give written notice of the determination to every person who is a licensee in respect of a licensed area or sub-area which is wholly or partly included in the cluster area and any other person to whom notice of the proposed determination was given; (b) publish a notice of the determination on a website that is, and indicates that it is, kept by or on behalf of the Secretary of State. (8) The Secretary of State may vary or revoke a determination made under this section, and subsections (4), (5), (6)(a) and (b) and (7) are to apply as if the variation or revocation were a new determination. (356JDA) (1) In section 356JD “previously authorised oil field”, in relation to a cluster area, means an oil field, other than a decommissioned oil field, whose development (in whole or in part) was authorised for the first time before the relevant day. (2) An oil field is a “decommissioned oil field” in relation to a cluster area if, immediately before the relevant day, all assets of the oil field which are relevant assets have been decommissioned. (3) In this section, “relevant day”, in relation to an oil field and a cluster area, means the date of publication of the first determination, or variation of a determination, under section 356JD as a result of which the oil field is (ignoring section 356JD(2)) wholly or partly included in the cluster area. (4) Sub-paragraphs (2) to (9) of paragraph 7 of Schedule 1 to OTA 1975 apply for the purpose of determining whether relevant assets of an oil field are decommissioned as they apply for the purpose of determining whether qualifying assets of a relevant area are decommissioned. (5) For the purposes of this section, an asset is a relevant asset of an oil field if— (a) it has at any time been a qualifying asset (within the meaning of the Oil Taxation Act 1983) in relation to any participator in the field, and (b) it has at any time been used for the purpose of winning oil from the field. (6) In this section references to authorisation of development of an oil field are to be interpreted in accordance with section 356IB. (7) See also paragraph 5 of Schedule 13 to FA 2015, as a result of which certain proposed determinations made before the day on which that Act is passed are treated as made under section 356JD for the purposes of this Chapter. (356JE) (1) For the purposes of this Chapter, expenditure incurred by a company is “investment” expenditure only if it is— (a) capital expenditure, or (b) expenditure of such other description as may be prescribed by the Treasury by regulations. (2) Regulations under subsection (1)(b) may provide for any of the provisions of the regulations to have effect in relation to expenditure incurred before the regulations are made. (3) But subsection (2) does not apply to any provision of amending or revoking regulations which has the effect that expenditure of any description ceases to be investment expenditure. (4) Regulations under subsection (1)(b) may— (a) make different provision for different purposes; (b) make transitional provision and savings. (356JF) (1) Subsection (2) applies where a company— (a) is a licensee in a licensed area or sub-area which is wholly or partly included in a cluster area, and (b) incurs any relievable investment expenditure on or after 3 December 2014 in relation to the cluster area. (2) The company is to hold an amount of allowance equal to 62.5% of the amount of the expenditure. Allowance held under this Chapter is called “cluster area allowance”. (3) For the purposes of this section investment expenditure incurred by a company is “relievable” only if, and so far as, it is incurred for the purposes of oil-related activities (see section 274). (4) Subsections (1) to (3) are subject to section 356JFA (which prevents expenditure on the acquisition of an asset from being relievable in certain circumstances). (5) Cluster area allowance is said in this Chapter to be “generated” at the time when the investment expenditure is incurred (see section 356JN) and is referred to as being generated— (a) “by” the company concerned; (b) “in” the cluster area concerned. (6) Where— (a) investment expenditure is incurred only partly for the purposes of oil-related activities, or (b) the oil-related activities for the purposes of which investment expenditure is incurred are carried on only partly in relation to a particular cluster area, the expenditure is to be attributed to the activities or area concerned on a just and reasonable basis. (356JFA) (1) Investment expenditure incurred by a company (“the acquiring company”) on the acquisition of an asset is not relievable expenditure for the purposes of section 356JF if either of the disqualifying conditions in this section applies to the asset. (2) The first disqualifying condition is that investment expenditure incurred before the acquisition, by the acquiring company or another company, in acquiring, bringing into existence or enhancing the value of the asset was relievable under section 356JF. (3) The second disqualifying condition is that— (a) the asset— (i) is the whole or part of the equity in a licensed area or sub-area, or (ii) is acquired in connection with a transfer to the acquiring company of the whole or part of the equity in a licensed area or sub-area, (b) expenditure was incurred, at any time before the acquisition, by the acquiring company or another company, in acquiring, bringing into existence or enhancing the value of the asset, and (c) any of that expenditure— (i) related to the cluster area, and (ii) would have been relievable under section 356JF if this Chapter had applied to expenditure incurred at that time. (4) For the purposes of subsection (3)(a)(ii), it does not matter whether the asset is acquired at the time of the transfer. (356JG) (1) A company's adjusted ring fence profits for an accounting period are to be reduced by the cumulative total amount of activated allowance for the accounting period (but are not to be reduced below zero). (2) In relation to a company and an accounting period, the “cumulative total amount of activated allowance” is— $$A + C$where—A is the total of any amounts of activated allowance the company has, for any cluster areas, for the accounting period (see section 356JH(2)) or for reference periods within the accounting period (see section 356JJ(1)), andC is any amount carried forward to the period under section 356JGA.$ (356JGA) (1) This section applies where, in the case of a company and an accounting period, the cumulative total amount of activated allowance (see section 356JG(2)) is greater than the adjusted ring fence profits. (2) The difference is carried forward to the next accounting period. (356JH) (1) This section applies where— (a) for the whole or part of an accounting period, a company is a licensee in a licensed area or sub-area which is wholly or partly included in a cluster area, (b) the accounting period is not divided into reference periods (see section 356JI), (c) the company holds, for the accounting period and the cluster area, a closing balance of unactivated allowance (see section 356JHA) which is greater than zero, and (d) the company has relevant income from the cluster area for the accounting period. (2) The amount of activated allowance the company has for that accounting period and that cluster area is the smaller of— (a) the closing balance of unactivated allowance held for the accounting period and the cluster area; (b) the company's relevant income for that accounting period from that cluster area. (3) In this Chapter “relevant income”, in relation to a cluster area and an accounting period of a company, means production income of the company from any oil extraction activities carried on in that area that is taken into account in calculating the company's adjusted ring fence profits for the accounting period. (356JHA) The closing balance of unactivated allowance held by a company for an accounting period and a cluster area is— $$P + Q$where—P is the amount of cluster area allowance generated by the company in the cluster area in the accounting period (including any amount treated under section 356JKB(1) as generated by the company in that cluster area in that accounting period);Q is any amount carried forward from an immediately preceding accounting period under section 356JHB(1) or from an immediately preceding reference period under section 356JJB(1).$ (356JHB) (1) If, in the case of an accounting period of a company and a cluster area, the amount given by subsection (2) is greater than zero, that amount is treated as cluster area allowance held by the company for that cluster area for the next period (and is treated as held with effect from the beginning of that period). (2) The amount is— $$U − A − T$where—U is the closing balance of unactivated allowance held for the accounting period and the cluster area;A is the amount of activated allowance that the company has for the accounting period and the cluster area (see section 356JH(2));T is the sum of any amounts transferred by the company under section 356JK in connection with a disposal or disposals made on the day following the end of the accounting period.$ (3) If the accounting period is followed by a reference period of the company belonging to that cluster area (see section 356JI), “the next period” means that period. (4) If subsection (3) does not apply “the next period” means the next accounting period of the company. (356JI) (1) This section applies where— (a) a company is a licensee for the whole or part of an accounting period in one or more licensed areas or sub-areas (“the relevant areas”) which are wholly or partly included in a cluster area, and (b) in the case of at least one of the relevant areas, the company has different shares of the equity in the area on different days in the accounting period. (2) For the purposes of this Chapter, the accounting period is to be divided into as many consecutive periods (called “reference periods”) as are necessary to secure that— (a) a reference period begins with the first day of the accounting period, (b) a reference period begins with the date of each disposal or acquisition of a share of the equity in any of the relevant areas that is made by the company in that accounting period (not including acquisitions or disposals made on the first day of the accounting period), and (c) a reference period ends with the last day of the accounting period. (3) Each such reference period “belongs to” the cluster area concerned. (356JJ) (1) The amount (if any) of activated allowance that a company has for a cluster area for a reference period is the smaller of the following— (a) the company's relevant income from the cluster area for the reference period; (b) the total amount of unactivated allowance that is attributable to the reference period and the cluster area (see section 356JJA). (2) The company's relevant income from the cluster area for the reference period is so much of the company's relevant income from the cluster area for the accounting period (see section 356JH(3)) as arises in the reference period. (356JJA) (1) For the purposes of section 356JJ(1)(b), the total amount of unactivated allowance attributable to a reference period and a cluster area is— $$P + Q$where—P is the amount of allowance generated by the company in the reference period in the cluster area (including any amount treated under section 356JKB(1) as generated by the company in that area in that reference period);Q is the amount given by subsection (2) or (3).$ (2) Where the reference period is not immediately preceded by another reference period but is preceded by an accounting period of the company, Q is equal to the amount (if any) that is to be carried forward from that preceding accounting period under section 356JHB(1). (3) Where the reference period is immediately preceded by another reference period, Q is equal to the amount (if any) carried forward under section 356JJB(1). (356JJB) (1) If, in the case of a reference period (“RP1”) of a company, the amount given by subsection (2) is greater than zero, that amount is treated as cluster area allowance held by the company for the cluster area concerned for the next period. (2) The amount is— $$U − A − T$where—U is the total amount of unactivated allowance attributable to the reference period and the cluster area (see section 356JJA);A is the amount of activated allowance that the company has for the cluster area for the reference period (see section 356JJ);T is the sum of any amounts transferred by the company under section 356JK in connection with a disposal or disposals made on the day following the end of the reference period.$ (3) If RP1 is immediately followed by another reference period of the company (belonging to the same cluster area), “the next period” means that reference period. (4) If subsection (3) does not apply, “the next period” means the next accounting period of the company. (356JK) (1) Subsections (2) and (3) apply where— (a) a company (“the transferor”) makes a disposal, on the day following the end of an accounting period or reference period, of the whole or part of its share of the equity in a licensed area or sub-area which is wholly or partly included in a cluster area (“the relevant cluster area”), and (b) the maximum transferable amount is greater than zero. Each company to which a share of the equity is disposed of is referred to in this section as a “transferee”. (2) The transferor may, by an election, transfer to the transferee (or transferees) a specified amount of cluster area allowance (greater than zero) which— (a) is not less than the minimum transferable amount, and (b) is not more than the maximum transferable amount. (3) If the transferor does not make an election under subsection (2), the minimum transferable amount of cluster area allowance (if greater than zero) is transferred to the transferee (or transferees). (4) An election under subsection (2)— (a) must be made within the 60 days beginning with the date of the disposal, (b) must— (i) specify the date of the disposal and the amount of cluster area allowance transferred, and (ii) identify the transferees, and (c) is irrevocable. (5) The minimum transferable amount is— $$( G − A ) × E1 − E2 E1$where—G is so much of the total generated allowance for the relevant cluster area (see subsection (6)) as is attributable on a just and reasonable basis to the licensed area or sub-area mentioned in subsection (1);A is the total of any amounts of allowance which have, in relation to any accounting period or reference period of the transferor ending before the date of the disposal, been activated under section 356JH or 356JJ in relation to the relevant cluster area;E1 is the transferor's share of the equity in the licensed area or sub-area immediately before the disposal;E2 is the transferor's share of the equity in the licensed area or sub-area immediately after the disposal.$ (6) In the definition of “G” in subsection (5), “the total generated allowance for the relevant cluster area” means the total of— (a) all amounts of cluster area allowance generated by the transferor in that cluster area before the date of the disposal, and (b) any amounts treated under section 356JKB(1) as so generated on the date of the disposal. (7) The maximum transferable amount is— $$M × E1 − E2 E1$where—M is the smaller of—G (as defined in subsection (5)), andthe transferor's pre-transfer total of unactivated allowance for the relevant cluster area;E1 and E2 have the same meaning as in subsection (5).$ (8) In subsection (7) the transferor's “pre-transfer total of unactivated allowance for the relevant cluster area” means— $$P + Q – ( A + S )$where—P and Q are—if the disposal is made on the day following the end of an accounting period, the same as in section 356JHA (in its application to that period), orif the disposal is made on the day following the end of a reference period, the same as in section 356JJA(1) (in its application to that period);A is—if the disposal is made on the day following the end of an accounting period, the same as in section 356JHB(2) (in its application to that period), orif the disposal is made on the day following the end of a reference period, the same as in section 356JJB(2) (in its application to that period);S is the total of any amounts of allowance transferred by the transferor in connection with any prior disposals (see section 356JKA) made in relation to the relevant cluster area on the day on which the disposal is made.$ (9) For the effect of a transfer of cluster area allowance in relation to the transferor, see— (a) for disposals made on the day following the end of an accounting period, section 356JHB (reduction of unactivated allowance carried forward from accounting period), or (b) for disposals made on the day following the end of a reference period, section 356JJB (reduction of unactivated allowance carried forward from reference period). (356JKA) (1) Subsections (2) to (4) apply where a company makes, on a single day and in relation to a single cluster area, more than one disposal falling within section 356JK(1)(a). (2) The company may, by an election, choose the order of priority of the disposals for the purposes of section 356JK(8). (3) A disposal which is placed higher in the order of priority than another disposal is a “prior disposal” in relation to the other for the purposes of the definition of “S” in section 356JK(8). (4) An election under subsection (2) is irrevocable. (356JKB) (1) Where a transfer of cluster area allowance is made under section 356JK, each transferee is treated as generating in the cluster area concerned, at the beginning of the accounting period or reference period of the transferee that begins with the day on which the disposal is made, cluster area allowance of the amount given by subsection (2). (2) The amount is— $$T × E3 E1 − E2$where—T is the total amount of cluster area allowance transferred in connection with the disposal;E3 is the share of equity in the licensed area or sub-area that the transferee has acquired from the transferor;E1 and E2 are the same as in section 356JK(5).$ (3) In this section references to the transferor and the transferees are to be read in accordance with section 356JK(1). (356JL) (1) Subsection (2) applies where— (a) a company (“C”) disposes of the whole or part of its share of the equity in a licensed area or sub-area (“area A”), (b) that area is wholly or partly included in a cluster area, and (c) C has generated in the cluster area, on or before the day of the disposal, cluster area allowance which is wholly or partly attributable to an unlicensed area (“area U”) in the cluster area. (2) C may, by an election, assign to area A, or to any other relevant licensed area or sub-area in the cluster area, so much of the total of generated allowance for the cluster area as is attributable to area U. (3) The reference in subsection (2) to a “relevant” licensed area or sub-area is to a licensed area or sub-area in which C is a licensee. (4) In subsection (2), “the total of generated allowance for the cluster area” means the total of all amounts of cluster area allowance generated by C in the cluster area at any time on or before the day of the disposal (including any amounts treated under section 356JKB(1) as so generated). (5) An election under this section must be made within the 60 days beginning with the date of the disposal and must specify— (a) the amount of cluster area allowance transferred, (b) the unlicensed area to which it was attributable, and (c) the licensed area or sub-area to which it is assigned. (6) An election under this section is irrevocable. (7) Where an amount of cluster area allowance is assigned to a licensed area or sub-area by an election under this section, that amount is taken, for the purposes of this Chapter— (a) to have been attributable to that licensed area or sub-area with effect from the beginning of the day on which the disposal is made, and (b) never to have been attributable to area U. (8) In this section— - “attributable” means attributable on a just and reasonable basis; - “unlicensed area” means an area which is not (and is not part of) a licensed area or sub-area. (356JM) (1) This section applies if there is any alteration in a company's adjusted ring fence profits for an accounting period after this Chapter has effect in relation to the profits. (2) Any necessary adjustments to the operation of this Chapter (whether in relation to the profits or otherwise) are to be made (including any necessary adjustments to the effect of section 356JG on the profits or to the calculation of the amount to be carried forward under section 356JGA). (356JMA) (1) The Treasury may by regulations substitute a different percentage for the percentage that is at any time specified in section 356JF(2) (calculation of allowance as a percentage of investment expenditure). (2) Regulations under subsection (1) may include transitional provision. (356JN) (1) Section 5 of CAA 2001 (when capital expenditure is incurred) applies for the purposes of this Chapter as for the purposes of that Act. (2) Regulations under section 356JE(1)(b) may make provision about when any expenditure that is investment expenditure as a result of the regulations is to be treated for the purposes of this Chapter as incurred. (356JNA) Where any person is entitled to a share of equity in a licensed area which relates to part only of that area— (a) that part is referred to in this Chapter as a “licensed sub-area”, and (b) the share of equity is referred to in this Chapter as a share of equity in the licensed sub-area, and references to a licensee in a licensed sub-area are to be interpreted accordingly. (356JNB) In this Chapter (except where otherwise specified)— - “adjusted ring fence profits”, in relation to a company and an accounting period, is to be read in accordance with section 330ZA; - “cluster area allowance” has the meaning given by section 356JF(2); - “cumulative total amount of activated allowance” has the meaning given by section 356JG(2); - “licence” has the same meaning as in Part 1 of OTA 1975 (see section 12(1) of that Act); - “licensed area” has the same meaning as in Part 1 of OTA 1975; - “licensee” has the same meaning as in Part 1 of OTA 1975 (but see also section 356JNA); - “relevant income”, in relation to a cluster area and an accounting period, has the meaning given by section 356JH(3).

Restriction of field allowances

3

Section 349A (meaning of “additionally-developed oil field”), so far as it continues to have effect for certain purposes (in accordance with Part 2 of Schedule 12 to this Act) in the case of projects authorised before 1 April 2015, is to be read as if in subsection (1)—

(a) the “and” at the end of paragraph (aa) were omitted;

(b) after paragraph (b) there were inserted

, and (c) on the authorisation day the oil field has never been (and is not treated by virtue of paragraph 5 of Schedule 13 to FA 2015 as having been) wholly or partly included in a cluster area.

4

Section 350 (meaning of “new oil field”), so far as it continues to have effect for certain purposes (in accordance with Part 2 of Schedule 12 to this Act) in the case of development authorised before 1 January 2016, is to be read as if after subsection (4) there were inserted—

(5) Any authorisation of development of an oil field is treated as not being an authorisation of development for the purposes of subsection (1)(b) if it is given on a day on which the oil field is (or is treated by virtue of paragraph 5 of Schedule 13 to FA 2015 as having been) wholly or partly included in a cluster area.

PART 2 — Transitional provision

Proposed determinations of cluster areas

5

(1) Sub-paragraph (2) applies if the Secretary of State has published, on any day (“the day of publication”) in the period beginning with 3 December 2014 and ending with the day before the day on which this Act is passed, a proposal to determine a specified offshore area to be a cluster area for the purposes of Chapter 9 of Part 8 of CTA 2010.

(2) The proposal is treated for the purposes of that Chapter—

(a) as a determination validly made under section 356JD of that Act and as having had effect from the day of publication, and

(b) if the Secretary of State has published (before the end of the period mentioned in sub-paragraph (1)) an announcement of the withdrawal of the proposal, as having ceased to have effect on the date of publication of that announcement.

But this sub-paragraph is subject to paragraph 6.

(3) If a proposal published as mentioned in sub-paragraph (1) (and not withdrawn before the day on which this Act is passed) assigns an identifying number or other designation to the proposed cluster area, that number or other designation is treated as having been assigned under section 356JD(6).

(4) An area is “offshore” for the purposes of this paragraph if the whole of it lies on the seaward side of the baselines from which the territorial sea of the United Kingdom is measured.

(5) In this paragraph, references to publication are to publication on a website that is, and indicates that it is, kept by or on behalf of the Secretary of State.

Option to exclude certain fields from cluster area allowance

6

(1) This paragraph applies where—

(a) a cluster area has been determined under section 356JD of CTA 2010 on a day before the cut-off date, or is treated under paragraph 5 as having been so determined, and

(b) a particular oil field would (in the absence of this paragraph) be wholly or partly included in the cluster area for the purposes of Chapter 9 of Part 8 of CTA 2010.

(2) The relevant companies may, within 60 days of the day the determination of the cluster area is published, jointly elect that Chapters 6A and 9 of Part 8 of CTA 2010, and Chapter 7 of that Part so far as it continues to have effect, are to have effect as if no part of the oil field were included in the cluster area (and an election made as mentioned in this sub-paragraph is effective whether made before or after the day on which this Act is passed).

(3) An election under sub-paragraph (2) made on or after the day on which this Act is passed is irrevocable.

(4) In this paragraph “the relevant companies” means the companies which are licensees in the oil field at the date of the election.

(5) “The cut-off date” means a day to be specified in regulations made by the Treasury.

(6) Section 1171(4) of CTA 2010 (regulations etc subject to annulment) does not apply to regulations under sub-paragraph (5).

(7) In this paragraph expressions which are used in Chapter 9 of Part 8 of CTA 2010 have the same meaning as in that Chapter.

SCHEDULE 14

PART 1 — Amendments of CTA 2010

1

CTA 2010 is amended as follows.

2

(1) Section 270 (overview of Part) is amended as follows.

(2) After subsection (6) insert—

(6A) Chapter 6A makes provision about the reduction of supplementary charge by an allowance for certain expenditure incurred in relation to qualifying oil fields for the purposes of oil-related activities.

(3) Omit subsection (7).

(4) After subsection (7A) insert—

(7B) Chapter 9 makes provision about the reduction of supplementary charge by an allowance for certain expenditure incurred in relation to a cluster area for the purposes of oil-related activities.

(5) In subsection (8)—

(a) at the end of paragraph (a) insert “ and ”, and

(b) omit paragraph (c) and the “and” before it.

3

In section 330 (supplementary charge in respect of ring fence trades), for subsection (5) substitute—

(5) This Chapter is subject to— (a) Chapter 6A (reduction of supplementary charge: investment allowance), (b) Chapter 8 (reduction of supplementary charge: onshore allowance), and (c) Chapter 9 (reduction of supplementary charge: cluster area allowance).

4

After section 330 insert—

(330ZA) (1) In this section “relieving Chapter” means any of the following— (a) Chapter 6A (reduction of supplementary charge: investment allowance); (b) Chapter 8 (reduction of supplementary charge: onshore allowance); (c) Chapter 9 (reduction of supplementary charge: cluster area allowance). (2) Where a company has allowances under more than one relieving Chapter available for reducing the adjusted ring fence profits that are to be chargeable under section 330(1) for an accounting period, the company may choose the order in which the relieving Chapters in question are to be applied. (3) In any relieving Chapter, “adjusted ring fence profits”, in relation to a company and an accounting period, means the adjusted ring fence profits which would (ignoring all relieving Chapters except those which the company chooses to apply before that Chapter) be taken into account in calculating the supplementary charge on the company under section 330(1) for the accounting period.

5

In section 356C (generation of onshore allowance), in subsection (9)(a), for “section 351” substitute “ section 356IB ”.

6

Omit section 356DB (companies with both field allowance and onshore allowance).

7

Before section 356J (but after the heading “Interpretation”) insert—

(356IB) (1) In this Chapter a reference to authorisation of development of an oil field is a reference to a national authority— (a) granting a licensee consent for development of the field, (b) serving on a licensee a programme of development for the field, or (c) approving a programme of development for the field. (2) In this section— - “consent for development”, in relation to an oil field, does not include consent which is limited to the purpose of testing the characteristics of an oil-bearing area, - “development”, in relation to an oil field, means winning oil from the field otherwise than in the course of searching for oil or drilling wells, and - “national authority” means— 1. the Secretary of State, or 2. a Northern Ireland department.

8

In section 356JB (definitions for Chapter 8), in the definition of “adjusted ring fence profits”, for the words from “means” to the end substitute “ is to be read in accordance with section 330ZA ”.

9

(1) Schedule 4 (index of defined expressions) is amended as follows.

(2) Omit the entries for—

“additionally-developed oil field (in Chapter 7 of Part 8)”,

“adjusted ring fence profits (in Chapter 7 of Part 8)”,

“adjusted ring fence profits (in Chapter 8 of Part 8)”,

“authorisation day (in Chapter 7 of Part 8)”,

“authorisation of development of an oil field (in Chapter 7 of Part 8)”,

“eligible oil field (in Chapter 7 of Part 8)”,

“licensee (in Chapter 7 of Part 8)”,

“new oil field (in Chapter 7 of Part 8)”,

“qualifying oil field (in Chapter 7 of Part 8)”,

“relevant income (in Chapter 7 of Part 8)”,

“small oil field (in Chapter 7 of Part 8)”,

“total field allowance for a new oil field (in Chapter 7 of Part 8)”,

“total field allowance for an additionally-developed oil field”,

“ultra heavy oil field (in Chapter 7 of Part 8)”, and

“ultra high pressure/high temperature oil field (in Chapter 7 of Part 8)”.

(3) At the appropriate places insert—

adjusted ring fence profits (in Chapters 6A, 8 and 9 of Part 8)	section 330ZA”;

;

cluster area (in Part 8)	section 356JD

;

cluster area allowance (in Chapter 9 of Part 8)	section 356JF(2)

;

cumulative total amount of activated allowance (in Chapter 6A of Part 8)	section 332E(2)

;

cumulative total amount of activated allowance (in Chapter 9 of Part 8)	section 356JG(2)

;

investment allowance (in Chapter 6A of Part 8)	section 332C(2)

;

investment expenditure (in Chapter 6A of Part 8)	section 332BA

;

investment expenditure (in Chapter 9 of Part 8)	section 356JE

;

licence (in Chapter 6A of Part 8)	section 332KA

;

licence (in Chapter 9 of Part 8)	section 356JNB

;

licensed area (in Chapter 9 of Part 8)	section 356JNB

;

licensed sub-area (in Chapter 9 of Part 8)	section 356JNA

;

licensee (in Chapter 6A of Part 8)	section 332KA

;

licensee (in Chapter 9 of Part 8)	section 356JNB

;

qualifying oil field (in Chapter 6A of Part 8)	section 332B

;

reference period (in Chapter 6A of Part 8)	section 332G

;

reference period (in Chapter 9 of Part 8)	section 356JI

;

relevant income (in Chapter 6A of Part 8)	section 332F(3)

;

relevant income (in Chapter 9 of Part 8)	section 356JH(3)

PART 2 — Commencement

10

(1) The amendments made by Part 1 of this Schedule have effect in relation to accounting periods ending on or after 1 April 2015.

(2) Sub-paragraph (1) is subject to sub-paragraphs (3) and (4).

(3) So far as they relate to cluster area allowance under Chapter 9 of Part 8 of CTA 2010 (as inserted by Schedule 13) the amendments made by Part 1 of this Schedule have effect in relation to expenditure incurred on or after 3 December 2014.

(4) So far as they relate to investment allowance under Chapter 6A of Part 8 of CTA 2010 (as inserted by Schedule 12) in respect of oil fields not falling within paragraph 6(1)(a) or (b) of that Schedule, the amendments made by Part 1 of this Schedule have effect subject to paragraphs 7 and 8 of that Schedule.

SCHEDULE 15

1

Part 3 of FA 1996 (landfill tax) is amended as follows.

2

(1) Section 42 (amount of tax charged on a taxable disposal) is amended as follows.

(2) In subsection (2), after “qualifying material” insert “ or qualifying fines ”.

(3) After subsection (3) insert—

(3A) Qualifying fines are a mixture of— (a) fines that consist of such qualifying material as is prescribed by order, and (b) fines that consist of material that is not qualifying material, that satisfies all the requirements prescribed in an order. (3B) An order under subsection (3A) relating to the mixture of fines may require, in particular— (a) that fines that consist of material that is not qualifying material do not exceed a prescribed proportion; (b) that the mixture of fines does not include prescribed materials or prescribed descriptions of materials; (c) that the mixture of fines is such that, if subjected to a prescribed test, it would give a prescribed result; (d) that the mixture of fines originates, or does not originate, in a prescribed way.

(4) In subsection (4)(a), after “listed” insert “ or what fines are to be qualifying fines ”.

(5) In subsection (6), after “listed,” insert “ or what fines are to be qualifying fines, ”.

3

In section 63 (qualifying material: special provisions), after subsection (4) insert—

(4A) Subsections (2) to (4) do not apply where the material disposed of consists of qualifying fines.

4

After section 63 insert—

(63A) (1) This section applies for the purposes of section 42. (2) An order may provide that fines must not be treated as qualifying fines unless prescribed conditions are met. (3) A condition may relate to any matter the Treasury think fit. (4) The conditions may include conditions making provision about— (a) the production of a document which includes a statement of the nature of the fines; (b) carrying out a specified test on fines proposed to be disposed of as qualifying fines; (c) the frequency with which tests are to be carried out on any fines proposed to be disposed of as qualifying fines; (d) the frequency with which tests are to be carried out on any fines that come from a particular source and are proposed to be disposed of as qualifying fines; (e) the steps to be taken by operators of landfill sites in relation to persons sending fines to be disposed of as qualifying fines. (5) The conditions may enable provision to be made by notices issued by the Commissioners in accordance with such provision as is made in the conditions. (6) A notice issued as described in subsection (5) may be revoked by a notice issued in the same way. (7) If an order includes provision falling within subsection (4)(b), the Commissioners may direct a person to carry out such a test in relation to any fines proposed to be disposed of as qualifying fines. (8) In this section “specified” means specified in— (a) a condition prescribed under subsection (2), or (b) a notice issued as described in subsection (5).

5

In section 70(1) (interpretation), at the appropriate place insert—

“fines” means particles produced by a waste treatment process that involves an element of mechanical treatment;

6

(1) In section 71 (orders and regulations), subsection (7) is amended as follows.

(2) After paragraph (a) insert—

(aa) an order under section 42(3A) providing for fines which would otherwise be qualifying fines not to be qualifying fines;

(3) After paragraph (c) insert—

(cza) an order under section 63A(2) other than one which provides only that an earlier order under section 63A(2) is not to apply to fines;

7

(1) Schedule 5 (provision about information etc) is amended as follows.

(2) In the heading to Part 1, after “Information” insert “ and samples ”.

(3) After paragraph 2A insert—

(2B) (1) Regulations may make provision about giving the Commissioners information about fines proposed to be disposed of, or disposed of, as qualifying fines. (2) Regulations under this paragraph may require a person to notify the Commissioners if the result of a test carried out on fines indicates that the fines are not qualifying fines. (2C) (1) Regulations may require persons— (a) where a sample is taken from a quantity of fines in order to carry out a test on the fines, to retain a prescribed amount of that sample; (b) to preserve fines retained under paragraph (a) for such period not exceeding three months as may be specified in the regulations. (2) A duty under regulations under this paragraph to preserve fines may be discharged by taking such steps to preserve them as the Commissioners may specify in writing.

(4) In paragraph 10 (power to take samples), after sub-paragraph (1) insert—

(1A) An authorised person, if it appears to the person necessary for the protection of the revenue against mistake or fraud, may at any time take, from material which the person has reasonable cause to believe is an amount of fines retained under paragraph 2C(1)(a), such samples as the person may require with a view to determining how the fines tested ought to be or to have been treated for the purposes of tax.

(5) In paragraph 22 (information)—

(a) in sub-paragraph (1)(b), after “2” insert “ or 2A ”;

(b) in sub-paragraph (3), for the words from “who” to “liable” substitute

who— (a) fails to preserve records in compliance with any provision of regulations made under paragraph 2 (read with that paragraph and any direction given under the regulations), or (b) fails to preserve records in compliance with any provision of regulations made under paragraph 2A (read with that paragraph and any direction given under the regulations), is liable

8

The amendments made by this Schedule have effect in relation to disposals that are—

(a) made in England and Wales or Northern Ireland, and

(b) made (or treated as made) on or after 1 April 2015.

SCHEDULE 16

PART 1 — Imposing liability on UK representative of non-UK resident company

1

(1) Chapter 6 of Part 22 of CTA 2010 (collection etc of tax from UK representatives of non-UK resident companies) has effect as if the enactments referred to in section 969(1) of that Act included enactments relating to diverted profits tax so far as they make provision for or in connection with the charging, collection and recovery of diverted profits tax or of interest on that tax.

(2) In its application in accordance with sub-paragraph (1), that Chapter has effect subject to the following modifications.

(3) In a case where section 86 applies in relation to company, that Chapter applies in relation to the avoided PE in relation to that company as it would apply to a permanent establishment in the United Kingdom through which the company carries on a trade.

(4) In section 969(3) of that Act references to “chargeable profits of the company attributable to that establishment” are to be read as references to “taxable diverted profits arising to the company”.

(5) In section 971 of that Act references to the giving or service of a notice includes a reference to the issuing of a notice.

Cases in which this Part applies

2

(1) This Part of this Schedule applies if—

(a) an amount of diverted profits tax has been charged on a company for an accounting period,

(b) the whole or any part of that amount is unpaid at the end of the due and payable date, and

(2) In this Part of this Schedule “the taxpayer company” means the company mentioned in sub-paragraph (1).

Meaning of “the relevant period”

3

In this Part of this Schedule “the relevant period”, in relation to an amount of unpaid diverted profits tax for an accounting period of the taxpayer company, means the period—

(a) beginning 12 months before the start of the accounting period, and

(b) ending when the unpaid tax became payable.

4

(1) A company is a “related company”, for the purposes of this Part of this Schedule, if, at any time in the relevant period, it was a member—

(a) of the same group as the taxpayer company,

(b) of a consortium which at that time owned the taxpayer company, or

(2) For the purposes of sub-paragraph (1)(a) two companies are members of the same group if—

(a) one is the 51% subsidiary of the other, or

(b) both are 51% subsidiaries of a third company.

(3) For the purposes of sub-paragraph (1)(c), two companies are members of the same group if they are members of the same group of companies within the meaning of Part 5 of CTA 2010 (group relief).

(4) For the purposes of this Part of this Schedule—

(a) a company is a member of a consortium if it is a member of a consortium within the meaning of Part 5 of CTA 2010, and

(b) a company is owned by a consortium if it is owned by a consortium within the meaning of that Part.

(5) In this paragraph “51% subsidiary” has the meaning given by section 1154 of CTA 2010.

Notice requiring payment of unpaid tax

5

(1) An officer of Revenue and Customs may serve a notice on a related company requiring it, within 30 days of the service of the notice, to pay—

(a) in a case which is not a consortium case, the amount of the unpaid tax, or

(b) in a consortium case, the proportion of that amount found under paragraph 7.

(2) The notice must state—

(a) the amount of diverted profits tax charged on the taxpayer company for the accounting period in question that remains unpaid,

(b) the date when it first became payable, and

(3) The notice has effect—

(a) for the purposes of the recovery from that company of the amount required to be paid and of interest on that amount, and

(b) for the purposes of appeals,

as if it were a charging notice and that amount were an amount of diverted profits tax charged on that company.

(4) In this Part of this Schedule “consortium case” means a case where the related company is not within paragraph 4(1)(a).

Time limit for giving notice

6

A notice under this Part of this Schedule must be served before the end of the period of 3 years beginning with the date when the charging notice or supplementary charging notice imposing the charge to tax was issued.

Amount payable in consortium case

7

(1) In a consortium case, the amount that the related company may be required to pay by notice under this Part of this Schedule is the proportion of the unpaid tax corresponding—

(a) if the company is only within paragraph 4(1)(b), to the share which the company has had in the consortium for the relevant period,

(b) if the company is only within paragraph 4(1)(c), to the share which companies that have been members of the same group of companies as the company have had in the consortium for the relevant period, or

(c) if the company is within paragraph 4(1)(b) and (c), to whichever is the greater of the amounts given by paragraph (a) and (b).

(2) For the purposes of this paragraph, a member's share in a consortium, in relation to the relevant period, is whichever is the lowest in that period of the percentages specified in sub-paragraph (3).

(3) Those percentages are—

(a) the percentage of the ordinary share capital of the taxpayer company which is beneficially owned by the member,

(b) the percentage to which the member is beneficially entitled of any profits available for distribution to equity holders of the taxpayer company, and

(c) the percentage to which the member would be beneficially entitled of any assets of the taxpayer company available for distribution to its equity holders on a winding up.

(4) If any of the percentages mentioned in sub-paragraph (3) has fluctuated in the relevant period, the average percentage over the period is to be taken.

(5) Chapter 6 of Part 5 of CTA 2010 (equity holders and profits or assets available for distribution) applies for the purposes of sub-paragraph (3) as it applies for the purposes of sections 143(3)(b) and (c) and 144(3)(b) and (c) of that Act.

Part 2: supplementary

8

(1) A company that has paid an amount in pursuance of a notice under this Part of this Schedule may recover that amount from the taxpayer company.

(2) A payment in pursuance of a notice under this Part of this Schedule is not allowed as a deduction in calculating income, profits or losses for any tax purposes.

SCHEDULE 17

Requirement to update DOTAS information

1

After section 310B of FA 2004 insert—

(310C) (1) This section applies where— (a) information has been provided under section 308 about any notifiable arrangements, or proposed notifiable arrangements, to which a reference number is allocated under section 311, and (b) after the provision of the information, there is a change in relation to the arrangements of a kind mentioned in subsection (2). (2) The changes referred to in subsection (1)(b) are— (a) a change in the name by which the notifiable arrangements, or proposed notifiable arrangements, are known; (b) a change in the name or address of any person who is a promoter in relation to the notifiable arrangements or, in the case of proposed notifiable arrangements, the notifiable proposal. (3) A person who is a promoter in relation to the notifiable arrangements or, in the case of proposed notifiable arrangements, the notifiable proposal must inform HMRC of the change mentioned in subsection (1)(b) within 30 days after it is made. (4) Subsections (5) and (6) apply for the purposes of subsection (3) where there is more than one person who is a promoter in relation to the notifiable arrangements or proposal. (5) If the change in question is a change in the name or address of a person who is a promoter in relation to the notifiable arrangements or proposal, it is the duty of that person to comply with subsection (3). (6) If a person provides information in compliance with subsection (3), the duty imposed by that subsection on any other person, so far as relating to the provision of that information, is discharged.

2

In section 316 of that Act (information to be provided in form and manner specified by HMRC), in subsection (2), after “310A,” insert “ 310C, ”.

3

In section 98C of TMA 1970 (notification under Part 7 of FA 2004), in subsection (2), after paragraph (ca) insert—

(cb) section 310C (duty of promoters to provide updated information),

Arrangements to be given reference number

4

In section 311(1)(a) of FA 2004 (period for allocation of reference number to arrangements) for “30 days” substitute “ 90 days ”.

Notification of employees

5

(1) Section 312A of FA 2004 (duty of client to notify parties of number) is amended as follows.

(2) After subsection (2) insert—

(2A) Where the client— (a) is an employer, and (b) by reason of the arrangements or proposed arrangements, receives or might reasonably be expected to receive an advantage, in relation to any relevant tax, in relation to the employment of one or more of the client's employees, the client must, within the prescribed period, provide to each of the client's relevant employees prescribed information relating to the reference number.

(3) For subsection (3) substitute—

(3) For the purposes of this section— (a) a tax is a “relevant tax”, in relation to arrangements or arrangements proposed in a proposal of any description, if it is prescribed in relation to arrangements or proposals of that description by regulations under section 306; (b) “relevant employee” means an employee in relation to whose employment the client receives or might reasonably be expected to receive the advantage mentioned in subsection (2A); (c) “employee” includes a former employee; (d) a reference to employment includes holding an office (and references to “employee” and “employer” are to be construed accordingly).

(4) In subsection (4), for “the duty under subsection (2)” substitute “ one or both of the duties under this section ”.

(5) In subsection (5), after “subsection (2)” insert “ or (2A) ”.

6

In section 313 of that Act (duty of parties to notifiable arrangements to notify Board of number, etc), after subsection (5) insert—

(6) The duty under subsection (1) does not apply in prescribed circumstances.

7

In section 316 of that Act (information to be provided in form and manner specified by HMRC), in subsection (2), after “312A(2)” insert “ and (2A) ”.

8

In section 98C of TMA 1970 (notification under Part 7 of FA 2004), in subsection (2), in paragraph (da), after “312A(2)” insert “ and (2A) ”.

Employers’ duty of disclosure

9

After section 313ZB of FA 2004 insert—

(313ZC) (1) This section applies if conditions A, B and C are met. (2) Condition A is that a person who is a promoter in relation to notifiable arrangements or a notifiable proposal is providing (or has provided) services in connection with the notifiable arrangements or notifiable proposal to a person (“the client”). (3) Condition B is that the client receives information under section 312(2) or as mentioned in section 312(5). (4) Condition C is that the client is an employer in circumstances where, as a result of the notifiable arrangement or proposed notifiable arrangement— (a) one or more of the client's employees receive, or might reasonably be expected to receive, in relation to their employment, an advantage in relation to any relevant tax, or (b) the client receives or might reasonably be expected to receive such an advantage in relation to the employment of one or more of the client's employees. (5) Where an employee is within subsection (4)(a), or is an employee mentioned in subsection (4)(b), the client must provide HMRC with prescribed information relating to the employee at the prescribed time or times. (6) The client need not comply with subsection (5) in relation to any notifiable arrangements at any time after HMRC have given notice under section 312(6) or 313(5) in relation to the notifiable arrangements. (7) The duty under subsection (5) does not apply in prescribed circumstances. (8) Section 312A(3) applies for the purposes of this section as it applies for the purposes of that section.

10

In section 316 of that Act (information to be provided in form and manner specified by HMRC), in subsection (2), for “and 313ZA(3)” substitute “ , 313ZA(3) and 313ZC(5) ”.

11

In section 98C of TMA 1970 (notification under Part 7 of FA 2004), in subsection (2), after paragraph (dc) insert—

(dca) section 313ZC (duty of employer to provide details of employees etc),

Identifying scheme users

12

(1) Section 313C of FA 2004 (information provided to introducers) is amended as follows.

(2) For subsection (1) substitute—

(1) This section applies where HMRC suspect— (a) that a person (“P”) is an introducer in relation to a proposal, and (b) that the proposal may be notifiable. (1A) HMRC may by written notice require P to provide HMRC with one or both of the following— (a) prescribed information in relation to each person who has provided P with any information relating to the proposal; (b) prescribed information in relation to each person with whom P has made a marketing contact in relation to the proposal.

(3) In subsection (3), for “or by virtue of subsection (1)” substitute “ subsection (1A) ”.

(4) For the heading substitute “ Provision of information to HMRC by introducers ”.

13

In section 98C of TMA 1970 (notification under Part 7 of FA 2004: penalties), in subsection (2)(f) after “information” insert “ or have been provided with information ”.

Additional information

14

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