OT68010 - Transferable tax history - Onward sales - Introduction

Special rules apply to deal with the onward sale of an interest in an oil licence that was acquired as part of a TTH transaction.

Where there is an onward sale of the whole or part of a licence interest, amounts of TTH that were acquired with that interest in the oil licence may, subject to certain restrictions, be transferred on to the new purchaser.

Where the original purchaser has acquired interests in a licence in numerous separate transactions, for the purposes of the onward sales provisions, interests in the licence acquired later by the original purchaser are treated as being transferred to the second purchaser before licence interests acquired earlier.

Example

Company A acquired 20% of the licence interest in field X. It subsequently acquired a further 30% with TTH and then later a further 10%, with additional TTH. If it sells 15% of its total holding, it is treated as transferring the licence interest on a LIFO basis, so the 10% interest is treated as being transferred first, and then 5% of the 30% interest that was acquired previously.