SolvedOT05970 | PRT: terminal liftings - disposal of field interests - examples
From HM Revenue & Customs · Oil Taxation Manual
Example 1:
Big Fish Plc is selling its interest in Flippers field to Small Fry Ltd (unconnected). The completion date is 30 June. Flippers is part of Pisces blend.
Big Fish has two other field interests in Pisces:
Fin - June Production entitlement 100,000
Scales - June Production entitlement 300,000
Flippers production entitlement for June is 200,000
At 30 June Flippers’ stock position is as follows:
Operational closing stock 40,000
Tax closing stock 100,000
Difference (Tax Closing stock LESS operational Closing stock) = 60,000
Reallocation:
Fin: 60,000 x 100,000 / 400,000 = 15,000
Scales: 60,000 x 300,000 / 400,000 = 45,000
Tax allocated liftings in June:
Fin 50,000
Scales 150,000
Flippers 100,000
Total 300,000
Tax closing stock before adjustment:
Fin 50,000
Scales 150,000
Flippers 100,000
Total 300,000
Tax closing stock after adjustment:
Fin 65,000 (i.e. 50,000 + 15,000)
Scales 195,000 (i.e. 150,000 + 45,000)
Flippers 40,000 (I.e. same as operational closing stock)
Total 300,000
Example 2:
Bigger Fish Plc is selling its interest in Fluke field to Smaller Fry Ltd (unconnected). The Completion date is 30 June. Fluke is part of Pisces blend. Bigger Fish has two other field interests in Pisces:
Fin - June production entitlement 100,000
Scales - June production entitlement 300,000
Fluke production entitlement for June is 200,000
At 30 June Fluke’s stock position is as follows:
Operational closing stock 100,000
Tax closing stock 40,000
Difference (Tax Closing stock LESS operational Closing stock) = -60,000
Reallocation:
Fin: 60,000 x 100,000\400,000 = 15,000
Scales: 60,000 x 300,000\400,000 = 45,000
Tax allocated liftings in June:
Fin 50,000
Scales 150,000
Fluke 100,000
Total 300,000
Tax closing stock before adjustment:
Fin 50,000
Scales 150,000
Fluke 40,000
Total 240,000
Tax closing stock after adjustment:
Fin 35,000 (i.e. 50,000 - 15,000)
Scales 105,000 (i.e. 150,000 - 45,000)
Fluke 100,000 (I.e. same as operational closing stock)
Total 240,000
Summary of examples
| Tax Closing stock Less operational Closing stock | Departing Field | Remaining field(s) |
|---|---|---|
| Result is POSITIVE | Reduce tax stock by deducting the positive figure | Increase tax stock by adding the positive figure |
| Result is NEGATIVE | Increase stock by deducting the negative figure | Reduce tax stock by adding the negative figure |