keep The Oil Taxation (Market Value of Oil) Regulations 2006
The Oil Taxation (Market Value of Oil) Regulations 2006 implement Schedule 3 to the Oil Taxation Act 1975 by establishing detailed methodologies for determining the market value of Category 1 oils (Brent, Ekofisk, Flotta, Forties, and Statfjord blends) and Category 2 oils for petroleum revenue tax purposes. The regulations prescribe: the notional delivery day calculation, averaging methodologies using three industry publications (Argus Crude, ICIS, Platts Oilgram), adjustment factors based on differentials over a 21-14 day window before delivery, and special rules for non-arm's length sales. They apply to oil delivered or appropriated on or after 1st July 2006.
While this regulation is complex, deletion would create substantial uncertainty and compliance costs. Without prescribed methodologies, every oil valuation for tax purposes would become a potential dispute, requiring costly transfer pricing analyses and HMRC negotiations for each transaction. The use of independent third-party publications (Argus, ICIS, Platts) provides objective market references. These rules prevent aggressive tax avoidance through non-arm's length related-party sales while providing certainty for both industry and the Exchequer. The regulation's core purpose—ensuring oil is taxed on arm's length market values—is legitimate and difficult to achieve through simpler alternatives.