OT14080 | PRT: non-field expenditure - exploration and appraisal expenditure: transitional provisions - interaction of FA93\S188 and S189

Alternative avenues for transitional relief might give rise to practical difficulties when claims are submitted, e.g. whether, and if so how, to notify LB Oil & Gas of the provision under which relief is being sought and how to ensure that appeal rights are protected.

An optional and non-statutory procedure, explained in a letter dated 12 August 1993 and addressed to all North Sea companies, was devised to facilitate the process. It allows the claimant, when making the claim, to specify that, in the event of LB Oil & Gas not accepting that the expenditure meets the OTA75\S5A(l)(aa) requirements (see OT14050), it should not be considered in the alternative as making a claim under FA93\S189 (see OT14060). This enables LB Oil & Gas to disallow the expenditure as soon as they satisfied that the claim does not meet OTA75\S5A(l)(aa). The disallowance can then be appealed in the normal way.

The following form of words is available on a non-statutory insert to Form PRT60A or can be provided in a letter accompanying the claim.

‘This claim is made under Schedule 7 OTA 1975 on the basis that all the expenditure claimed meets the requirements of OTA75\S5A(l)(aa). None of the expenditure is claimed to qualify for relief by virtue of FA93\S189, and in the event that LB Oil & Gas considers that any of the expenditure fails to meet OTA75\S5A(l)(aa), the company hereby requests that the expenditure be disallowed’.

If the company does not so specify, then LB Oil & Gas will allow the expenditure under FA93\S189, if it qualifies.