Total: just and reasonable profit apportionment

In Total E&P North Sea UK Ltd (formerly Maersk Oil North Sea UK Ltd) and another v HMRC [2020] EWCA Civ 1419 the Court of Appeal decided that companies with profits accruing unevenly which would be disadvantaged by a time based apportionment of oil related profits for the purposes of the supplementary charge were entitled to elect for a different profit apportionment method and that an alternative based on actual performance was just and reasonable.

The background to the case concerned an overnight increase in the supplementary charge rate on oil related activities from 20% to 32% announced in the Budget on 23 March 2011. Companies with accounting periods straddling 24 March 2011 had to calculate the charge as if they had two different accounting periods – one ending on 23 March 2011...