OT30302 - Capital Gains

Valuation of Oil Assets (including shares). Post Transaction Valuations. Procedure.

Information Requirements

Form CG34 sets out the basic requirements for Post Transaction Valuations, which include:

• A capital gains computation for the disposal, with an estimate of the corporation tax liability on chargeable gains;
• A copy of any valuation report obtained;
• If available, the cost and date of acquisition of the asset and details of any improvements made;
• For share valuations - accounts for the three years up to the valuation date;
• Any other papers which may be relevant;
• Any other information considered relevant to the valuation.

For oil assets this is extended to include:

• A detailed description of each oil asset; this should include the location and, as at the date of the valuation, information on reserves, costs, anticipated production, known or probable impediments to production and other risk factors which might potentially affect the value, provided where possible from third party sources;
• The relevant disposal or acquisition agreement;
• Draft or final Accounts for the period in which the transaction took place; or
• In the absence of the foregoing, management accounts or other indication of the intended accounting treatment;
• Financial information or analyses such as discounted cash flows used in arriving at the valuation and/or consideration paid/received, including details of the assumptions applied.

The above will not always be available, or indeed always needed, and should be read as indicative of the type and depth of information necessary for valuation purposes. Nor will it always be possible to agree a value on the information that is made available without further enquiry. OTO will aim to accept the value or, respond in detail within 56 days, but this will depend on the complexity of the valuation.

Allocations for Capital Allowances Purposes

Should advance agreement be required for the allocation of a value for capital allowances purposes, this can be submitted at the time, but must follow the general guidance on Post Transaction Clearances and Informal North Sea Clearances in CoP10 and OT00230.