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Licensing arrangements normally ensure that profits from the production of oil and gas are within the charge to UK tax.

UK residents carrying on activities in the territorial sea or designated areas (see OT40050) are also chargeable under the normal rules.

CTA09\S1313, ITTOIA05\S874 and ITEPA03\S41 bring within the charge to UK tax the many non resident companies, partnerships and individuals providing services in the waters surrounding the UK to the primary producers of oil and gas. This legislation was formerly at ICTA88\S830 and has been known as “Taxation of Non-Residents under S830�.

In broad terms, the legislation brings within the UK tax net:

• profits from certain oil and gas related activities carried on offshore;
• income from certain rights to natural resources situated offshore (see OT41000+)

»Ê¹ÚÌåÓýappse offshore contractors are companies who perform services directly to oil companies in support of their operations to explore & extract oil and gas from the North Sea. »Ê¹ÚÌåÓýappy provide a wide range of services including, but not limited to:

• Seismic surveys,
• »Ê¹ÚÌåÓýapp operation of drilling rig services,
• Construction type activities e.g. pipe-laying,
• »Ê¹ÚÌåÓýapp operation of Floating, Production, Storage and Offloading vessels (FPSO’s) etc.

»Ê¹ÚÌåÓýapp capital gains arising to non-residents disposing of “exploration or exploitation rightsâ€�, or shares which derive most of their value from such rights, are also chargeable. (see OT30801+)

In the case of some non-residents the effect of the above provisions is limited by Double Taxation Agreements (see OT41500+).