BIM62094 - Mineral extraction: royalties: mixed payments

The Mineral Royalties (Tax) Regulations 1971, SI1971/1035, provide for apportionment where royalties relate both to winning and working minerals and to other matters, for example, exploration as opposed to exploitation, rents and wayleaves for use of land giving access to the workings or for the use of services (water, electricity etc) and rent for land on which plant or buildings are used for the treatment or conversion of minerals. Qualifying royalties are limited to those which might reasonably be expected to have been payable under the agreement:

1. if it conferred only the right to carry out specified operations in relation to minerals in or under the land to which the agreement relates,

and

2. as if any buildings, structures, roads, shafts, adits or other works existing on the land at the commencement of the agreement did not exist.

Where 90% or more of the royalties qualify, however, no apportionment needs to be made.

Where an apportionment suggested by the taxpayer or agent appears to be reasonable in the light of the agreement and the information available in the District, it should be accepted.