Section 225G | Valuation where disposal not sale at arm's length

(1)This section applies if conditions A, B and C are met.

(2)Condition A is that a person disposes of oil acquired by the person—

(a)in the course of oil extraction activities carried on by the person, or

(b)as a result of oil rights held by the person.

(3)Condition B is that the disposal is not a sale at arm's length (as defined in paragraph 1 of Schedule 3 to OTA 1975).

(4)Condition C is that section 225F does not apply in relation to the disposal.

(5)For income tax purposes, the disposal of the oil, and its acquisition by the person to whom it was disposed of, are to be treated as having been for a consideration equal to the market value of the oil.

(6)Paragraphs 2 and 3A of Schedule 3 to OTA 1975 (definition of market value of oil including light gases) apply for the purposes of this section as they apply for the purposes of Part 1 of that Act, but with the following modifications.

(7)Those modifications are that—

(a)any reference in paragraph 2 to the notional delivery day for the actual oil is to be read as a reference to the day on which the oil is disposed of as mentioned in this section, and

(b)paragraph 2(4) is to be treated as omitted.