ABSTRACT
The Fiscal Review highlighted the fact that the United Kingdom continental shelf could not continue to receive investments at its levels unless the applicable tax regime was reformed. This chapter discusses the existing regime prior to the recent modifications to understand how the system has changed and to which technical aspects these modifications apply. It discusses the fiscal pillar and looks at the components that make up the ring fence profits, namely the ring fence income and the treatments of relevant expenditures. The chapter also discusses the rationale behind the introduction of the supplementary charge before looking at its components including the relevant allowances and reliefs that have been subject to changes with the Fiscal Review. It explains the allowances that relate to small fields, ultra-heavy oil fields, and ultra-high pressure and high temperature fields. The chapter describes the statutory components of the profit/loss arithmetic arising out of a field.
