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(5) An exemption from PRT is allowed for revenue relating
to North Sea natural gas production derived from pre-July
1975 contracts with the British Gas Corporation;
(6) Upon abandoning fields, carryover of unused losses
are allowed without limit to other North Sea fields;
(7) PRT was enacted as a “prior charge” to the Ring
Fence Tax which means that PRT is computed, assessed,
and paid before the Ring Fence Tax, and PRT is
deductible in computing the Ring Fence Tax;
(8) Of the limited types of expenses that are not allowed
as deductions for PRT purposes, interest expense is the only
nonallowable expense that is significant, and in lieu of
interest expense, a deduction is allowed for “uplift”
(discussed further, infra).
Because of the above features of PRT, activities in a North
Sea field generally are not subject to PRT until they reflect a
cumulative profit.
PRT liability of a company is to be paid only in cash, not
in kind.
On a number of occasions, in response to changes in world
oil markets and in order to make certain adjustments to PRT,
provisions of PRT were amended by the United Kingdom. Such
amendments that, over the years, have been made to PRT are not
particularly significant to the issue before us and generally are
not described herein.
As indicated, in order to minimize PRT avoidance through
intercompany interest charges, interest expense deductions
relating to North Sea oil and gas recovery activities are not
allowed in computing PRT liability. Current deductions from
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