Paragraph 3

Paragraph 8 of Schedule 1 to OTA 1983 (allowable expenditure: use of new asset otherwise than in connection with taxable field) is amended as follows.

In sub-paragraph (1)(a) and (b), for “in connection with a taxable field” substitute “ for a qualifying purpose ”.

After sub-paragraph (2) insert—

“(2A)

In sub-paragraph (1) a reference to use for a qualifying purpose is a reference to—

(a)

use in connection with a taxable field, and

(b)

other use in—

(i)

the United Kingdom,

(ii)

the territorial sea of the United Kingdom, or

(iii)

a designated area,

except use wholly or partly for an ineligible oil purpose.

(2B)

In this Act a reference to use of an asset for an ineligible oil purpose is a reference to—

(a)

use in connection with an oil field that is not a taxable field, and

(b)

use for any other purpose (apart from a purpose falling within section 3(1)(b) of the principal Act) of a separate trade consisting of activities falling within section 492(1) of the Income and Corporation Taxes Act 1988.

(2C)

In sub-paragraphs (2A) and (2B) a reference to use in connection with a taxable field or other oil field includes use giving rise to receipts which, for the purposes of this Act, are tariff receipts.”