Jurisdiction(s):
United Kingdom

Upper Tribunal (TCC): CTA 2010 s 279 precludes Pt 22 business transfer; participator status key; HMRC’s £167m balancing charge fails in CATS North Sea Ltd v HMRC

Published on: 10 April 2026

Published by a Law360 reporter

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Article summary

CATS North Sea Ltd (CNSL) should not bear the uplift because it was not a deemed participant in the field where it continued a related company’s transport operations, and statutes bar transferring the incumbent’s oil business for tax purposes, the UT ruled. It also decided that the company’s participation status dictated the legal characterisation of the activities, even if, in practice, they were largely identical. The dispute concerned the interplay between several corporation tax provisions for oil businesses and a balancing charge, being an amount that HM Revenue and Customs (HMRC) adds to taxable profits when an asset is realised for more than its allocated value. HMRC applied its preferred balancing charge after a reorganisation under which CNSL, formerly a wholly owned subsidiary of Amoco Exploration Co LLC part of BP Plc, assumed Amoco’s interest in the Central Area Transmission System North Sea Oil and Gas pipeline (CATS Pipeline). Amoco sold its pipeline interest to CNSL for USD 1, and in 2015 then sold CNSL to Kellas for USD 388 million. CNSL returned a balancing charge of £23 million, whereas HMRC contended a charge in the range £166–169.2 million following the restructuring and subsequent sale of CNSL to Kellas thereafter...

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