OT14700 | PRT: associated party transactions - services

OTA75\Sch4\Para 2(4)(b)

When it comes to services it is necessary to “look through” the fees charged by an affiliate for services to ensure not only that the amount allowable for PRT purposes is restricted to cost but that any disallowable ingredients such as depreciation, interest and other finance costs are excluded from the composition of the fees involved.

It may be the case that offshore plant, such as computers, although dedicated to a field or fields are owned by an affiliated service company and a charge is made by that company to the North Sea company (and claimed for PRT purposes) based on the depreciation rate for the plant. Provided the depreciation rate reasonably reflects the life of the assets, such a charge may be accepted for PRT purposes.