OT05425 | PRT: valuation of non-arm's length disposals and appropriations - gas - valuation of light gases from 1 January 1994 - conclusion

The situation in which LB Oil & Gas would like to find itself is one where companies approach inter-group sales of gas on arm’s length principles so that it can accept what they do or, perhaps more realistically as there is always likely to be some room for disagreement, so that it can make as few alterations as possible. LB Oil & Gas encourages companies to enter into discussions with LB Oil & Gas at an early date and this will enable the possible points of disagreement to be identified and discussed. Only where companies do not follow the arm’s length approach will it be necessary for LB Oil & Gas to be prescriptive.

The OTA75\SCH3\PARA3A valuation methodology does not alter fundamentally the process by which a price formula is arrived at under the election machinery; the changes introduced by FA 1994 simply removed a number of statutory constraints which did not reflect changing commercial circumstances.