OT03100 - PRT: Overview of PRT - Definitions
Field
"Field" is a fundamental concept for PRT. OTA75\S12 states that an oil field is to be construed according to OTA75\SCH1 where it is defined as an area which an appropriate authority may determine to be an oil field, being an area of which every part is, or is part of, a licensed area. A field is determined on the basis of geological criteria by the Department of Energy and Climate Change (DECC) on behalf of the Secretary of State (see OT01007The Role of DECC - Field Determination Process). A field cannot extend into unlicensed acreage.
Licence
A field determination depends on the existence of a licence. For this purpose a licence is a production licence. Most of the expenditure incurred and allowable for PRT is incurred in relation to production licences. See OT30012 for more details on such licences.
Licensee
'Licensee' is defined in OTA75\S12. Most licensees qualify under the (a) definition, being persons who are entitled to the benefit of the licence. A person may however be a licensee under the (b) definition - having rights under an agreement which is approved by the Board and certified by the Secretary of State as conferring the same or similar rights as those of a licence. This may include persons with interests other than direct interests (e.g. the holders of sub-licences acquired as a result of a farm-in or similar arrangement). It does not, however confer on LBS Oil & Gas alone the right to impose licensee status.
Oil
Oil is given a wide meaning by OTA75\S1(1). It includes all substances won or capable of being won under the authority of a petroleum production licence. Oil, natural gas liquids and gas are therefore all "oil" for the purposes of PRT.
Participator
DECC (formerly the Department of Trade and Industry) is responsible for issuing production licences. The licence covers an area or areas known as a block. Normally a field is situated within one or perhaps two adjacent blocks. A company can either receive a 100% interest in a licence or it can be awarded a smaller percentage share in the licence with the remainder going to other companies. For tax purposes a licensee is known as a participator. Participator is defined in OTA75\S12(1). Generally, for PRT purposes a participator in a field for a chargeable period is any person who is or was:
- a licensee during any part of the chargeable period for any licensed area included wholly or partly within the field or;
- a licensee during any part of either of the two chargeable periods preceding the chargeable period or;
- a former licensee who at any time in the chargeable period had a share of oil won from the field (from any period) which was not disposed of (or was disposed of but not delivered) or not appropriated during the period
Broadly, any licensee is therefore a participator while a relevant licence is held and continues to be so for the two chargeable periods following the period in which the licence ceases to be held. A person also remains a participator after that time if oil stocks (see OT15150) continue to be held in any chargeable period. The definition of a participator is extended by FA99\S98 which applies in certain circumstances where changes of field ownership would otherwise have resulted in a change in the chargeable field (see OT15150).The definition of a participator is also extended by OTA75\SCH3\PARA5 to include companies operating under illustrative agreements (see OT19412).
Responsible Person
For each field one participator, usually the operator, is appointed by LBS Oil & Gas to act as Responsible Person. He has special responsibilities under the Acts in relation to the submission of returns and expenditure claims for the field (see OT04030 Appointment of Responsible Person).
Chargeable Periods
PRT is charged by reference to chargeable periods. There are two chargeable periods each year, each of six months duration, ending on 30 June or 31 December respectively (see OT04005).
Taxable and non-taxable fields
As PRT was abolished for new fields on or after 16 March 1993 there are two categories of fields. Fields given development consent on or after 16 March 1993 are non-taxable fields (see OT03515). Fields given development consent before the 16 March 1993 are within the charge to PRT and are taxable fields.
Transmedian Fields
A transmedian field exists when only part of an oil bearing structure falls within the United Kingdom Continental Shelf, the other part being under the jurisdiction of another country - see OT13450.
Foreign Fields
A foreign field is an area not under the jurisdiction of the UK, and specified as a foreign field by the Secretary of State (see OT13500).
