OT05430 - PRT: valuation of non-arm's length disposals and appropriations - gas - the ICI case - the arm바카라 사이트™s length rule
Regina vs Attorney-General ex parte ICI [60TC1]
In this case the producer contracted to sell all its gas from a field to an arm바카라 사이트™s length purchaser apart from certain gas which it could retain and sell to an affiliate. The argument which the Court of Appeal rejected was that the values of the non-arm바카라 사이트™s length disposals should be determined by the prices in the agreement with the arm바카라 사이트™s length purchaser because if the gas were not taken non-arm바카라 사이트™s length it would have to be sold to that purchaser at those prices or that it could not be sold for more than those prices. This argument fell because it presupposed a sale under terms affected by a pre-existing commercial relationship contrary to OTA75\SCH3\PARA1(1)(b).
The point may be made that this judgement prevents prices from a 바카라 사이트˜related바카라 사이트™ contract being used as an analogue in any circumstances and that there is, at first glance, a conflict with the requirement in OTA75\SCH3\PARA3A to have regard to all the relevant circumstances. In the ICI case however the contract in question was dated some years prior to the non-arm바카라 사이트™s length disposal and prices had increased significantly in this period. In making the judgement about the appropriateness of the election price formula at the date required by the legislation, it was not valid to advance the argument that the matter was determined by the prior contract.
Under the new rules of OTA75\SCH3\PARA3A the date of valuation is not prescribed as it was in the case of an election so there is also a difference of approach. The judgement in the ICI case should not be interpreted as meaning that 바카라 사이트˜related바카라 사이트™ contracts should not be taken into consideration especially if the prices therein can be corroborated from other sources. The 1994 legislation requires that regard should be had to all the circumstances and this is where it differs from the election legislation. LB Oil & Gas will however resist any suggestion that the related contract determines the issue irrespective of other factors.
There can be real difficulties where gases are disposed of non-arm바카라 사이트™s length for petrochemical use at one location and the fuel value at another location is higher. Under both the election legislation and the rules of Para3A, the gas will be valued on the basis of fuel use. There is no single answer to these problems and each case must be judged on its own facts under the principles in the legislation and case law.