OT19410 - PRT: Appendices

Outline

The PRT effect of the transfer to an associated company other than by means of an illustrative agreement of a participator’s rights etc. in connection with an oil field or relevant licence in so far as it relates to OTA75/SCH3/PARA5 is dealt with at OT18000 et seq.

FA80/SCH17 (see OT18000 et seq), deals with the transfer of an interest in an oil field, whether to an associated company or not, and applies whenever a participator in an oil field transfers the whole or part of his interest in the field as a result of a transaction or event other than:

1. A re-determination under a unitisation agreement (see OT18270) or
2. the making of an agreement or arrangement of the kind mentioned in paragraph 5 Schedule 3 OTA 1975. (ie an arrangement usually called an illustrative agreement)

Illustrative Agreements are now rare. The arrangement results in two participators for the same interest: the licensee and an associated company which has the economic interest. For further explanation of them and their main tax treatment see OT19412.