Finance Bill - continued        House of Lords
PART IV, OTHER TAXES - continued
Petroleum revenue tax - continued

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PRT: expenditure in certain gas-producing fields.     103. - (1) In section 10 of the Oil Taxation Act 1975 (modifications of Part I in connection with gas sold to the British Gas Corporation under contracts made before end of June 1975), for subsection (3) (modified apportionment rule for expenditure allowable under section 3(1)(a), (b), (c), (hh), (i) or (j)) substitute-
 
 
    "(3) Subsections (3A) to (3H) below apply where, in the case of any taxable field, the oil-
 
 
    (a) won and saved from the field, or
 
    (b) expected to be won and saved from the field,
       includes oil falling within subsection (1)(a) above.
 
      (3A) Any expenditure allowable under section 3 of this Act for the field by virtue of any of paragraphs (a) to (c) of section 3(1) of this Act shall be a proportion of what it would otherwise have been.
 
      (3B) The proportion mentioned in subsection (3A) above is that which, according to estimates submitted to the Secretary of State after the end of June 1975 and approved by him as reasonable, the field's original reserves of oil exclusive of oil falling within subsection (1)(a) above bear to the field's original reserves of oil inclusive of oil so falling.
 
      (3C) Until estimates have been submitted and approved for the purpose of subsection (3B) above, the expenditure allowable for the field under section 3 of this Act by virtue of section 3(1)(a), (b) or (c) of this Act shall be deemed to be nil.
 
      (3D) Any expenditure allowable under section 3 of this Act for the field by virtue of section 3(1)(hh) of this Act shall be a portion of what it would otherwise have been.
 
      (3E) That portion is determined in accordance with the following rules-
 
 
    1. Identify the abandonment guarantee (within the meaning given by section 104 of the Finance Act 1991) on the obtaining of which the expenditure was incurred.
 
    2. Identify the liabilities covered by the guarantee.
 
    3. Identify which of those liabilities relate to qualifying assets.
 
    4. Identify the portion of the expenditure that it is just and reasonable to apportion to the liabilities identified under rule 3.
 
    5. Identify the qualifying assets to which the liabilities identified under rule 3 relate.
 
    6. Identify the use of those qualifying assets that has been (or is expected to be) non-excluded use.
 
    7. Assume that expenditure is incurred on the provision of those qualifying assets and identify the proportion of the hypothetical expenditure that it would be just and reasonable to apportion to the use of those assets identified under rule 6.
 
    8. The portion mentioned in subsection (3D) above is then determined by multiplying-
 
      (i) the portion identified under rule 4, by
 
      (ii) the proportion (expressed as a fraction) identified under rule 7.
      (3F) Any expenditure allowable under section 3 of this Act for the field by virtue of section 3(1)(i) or (j) of this Act shall be a portion of what it would otherwise have been.
 
      (3G) That portion is determined in accordance with the following rules-
 
 
    1. Identify the qualifying asset that is relevant to the incurring of the expenditure.
 
    2. Identify the use of that qualifying asset that has been non-excluded use.
 
    3. Assume that expenditure is incurred on the provision of that qualifying asset and identify the proportion of the hypothetical expenditure that it would be just and reasonable to apportion to the use of that asset identified under rule 2.
 
    4. The portion mentioned in subsection (3F) above is then determined by multiplying-
 
      (i) the expenditure, by
 
      (ii) the proportion (expressed as a fraction) identified under rule 3.
      (3H) In subsections (3E) and (3G) above-
 
 
    "non-excluded use" means-
 
      (a) use in connection with the winning and saving of oil, other than excluded oil, from the field, or
 
      (b) use giving rise to receipts that, for the purposes of the Oil Taxation Act 1983, are tariff receipts attributable to a participator in the field;
 
    "qualifying asset" has the same meaning as it has for the purposes of the Oil Taxation Act 1983 (see section 8 of that Act).".
      (2) The amendments made by this section apply to expenditure incurred on or after 7th March 2001.
 
 
Landfill tax
Landfill tax: rate.     104. - (1) In section 42 of the Finance Act 1996 (amount of landfill tax), in subsections (1)(a) and (2) for "£11" substitute "£12".
 
      (2) This section has effect in relation to taxable disposals made, or treated as made, on or after 1st April 2001.
 
 
Climate change levy
Climate change levy.     105. - (1) Schedule 6 to the Finance Act 2000 (climate change levy) is amended as follows.
 
      (2) After paragraph 11 insert-
 
 

"Exemption: Northern Ireland gas supplies
 11A. A supply of gas is exempt from the levy if-
 
 
    (a) the supply is made by a gas utility, and
 
    (b) the person to whom the supply is made intends to cause the gas to be burned in Northern Ireland.".
      (3) In paragraph 14(2) (exemption for supplies to electricity producers does not apply to supplies to exempt unlicensed electricity suppliers, no matter what the electricity they produce is used for), at the end insert-
 
 
" , and
 
 
    (c) uses the electricity produced otherwise than in exemption-retaining ways.".
      (4) For paragraph 14(3)(c) (uses of electricity produced by an auto-generator that cause auto-generator to lose benefit of exemption for supplies to electricity producers), substitute-
 
 
    "(c) uses the electricity produced otherwise than in exemption-retaining ways.".
      (5) In paragraph 14, after sub-paragraph (3) insert-
 
 
    "(3A) For the purposes of this paragraph, electricity is used in an "exemption-retaining" way if it is used-
 
 
    (a) in making supplies that are excluded under paragraphs 8 to 10 or exempt under any of paragraphs 11, 12 and 18, or
 
    (b) in any of the ways mentioned in sub-paragraphs (i) to (iv) of paragraph 13(b).".
      (6) In paragraph 15(1)(a) (exemption for supplies to combined heat and power stations), for "the commodity is to be used by that person" there is substituted "that person intends to cause the commodity to be used".
 
      (7) The amendments made by this section have effect in relation to supplies made on or after 1st April 2001.
 
 
Inheritance tax
Transfers within group etc.     106. - (1) Section 97 of the Inheritance Tax Act 1984 (transfers within group etc.) is amended as follows.
 
      (2) In subsection (1) (minority participators in close company to be excluded from apportionment under section 94) for paragraph (a) (disposals to which section 171(1) of the Taxation of Chargeable Gains Act 1992 applies which are also transfers of value) substitute-
 
 
    "(a) there is-
 
      (i) a disposal of an asset by the transferor company, which is a disposal to which section 171(1) of the 1992 Act applies, or
 
      (ii) by virtue of an election under section 171A(2) of that Act, a deemed transfer by the transferor company to another member of the group,
 
    (aa) the disposal is also, or the deemed transfer gives rise to, a transfer of value, and".
      (3) The amendment made by this section has effect, and shall be taken always to have had effect, in relation to disposals made, or transfers deemed to have been made, on or after 1st April 2000.
 
 
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