OT14400 - PRT: Provisional Expenditure Allowance - Examples
Examples
Example A
Oil delivered and appropriated as returned: CP1 - 拢2m, CP2 - 拢3m, CP3 - 拢4m
CP1
No expenditure claims are made or allowed.
Provisional allowance for CP1 = 5% x 拢2m = 拢100,000
Less expenditure incurred and allowed in CP1 = nil
Provisional allowance is therefore 拢100,000.
CP2
No expenditure claims are made or allowed.
Provisional allowance for CP2 = 5% x 拢3m = 拢150,000
Less expenditure incurred and allowed in CP2 = nil
Provisional allowance is therefore 拢150,000.
CP3
No expenditure claims are made or allowed.
Provisional allowance for CP3 = 5% x 拢4m = 拢200,000
Less expenditure incurred and allowed in CP1 = nil
Provisional allowance is therefore 拢200,000.
Clawback of provisional allowance CP1 拢100,000
Example B
Oil delivered and appropriated as returned: CP1 - 拢2m, CP2 - 拢3m, CP3 - 拢4m
CP1
Claim of 拢200,000 under Schedule 6 but no expenditure allowed.
Provisional allowance for CP1 = 5% x 拢2m = 拢100,000
Less expenditure incurred and allowed in CP1 = nil
Provisional allowance is therefore 拢100,000.
CP2
拢50,000 of the above Schedule 6 claim is allowed.
Provisional allowance for CP2 = 5% x 拢3m = 拢150,000
Less expenditure incurred and allowed in CP2 (the expendiure was incurred in CP1) = nil
Provisional allowance is therefore 拢150,000.
There is no clawback of any provisional allowance for the last but one preceding period - this is only CP2 - but the OTA75\S2(10)(a) increase for the period has to be calculated. This is the lesser of:
- Total Shedule 5 and 6 expenditure allowed in CP2 but incurred in CP1 (拢50,000), and
- 5% provisional allowance (adjusted) for CP1 (拢100,000)
The increase under OTA75\S2(10)(a) is therefore 拢50,000.
CP3
Again a revision is needed.
Provisional allowance for CP3 = 5% x 拢4m = 拢200,000
Less expenditure incurred and allowed in CP3 = nil
Provisional allowance is therefore 拢200,000.
Clawback of provisional allowance CP1 拢100,000
There is no OTA75\S2(10)(a) increase as no expenditure incurred in the previous chargeable period (CP2) has been allowed in CP3. But as there was an increase for CP2, OTA75\S(10)(b) is triggered in CP3 to reduce the clawback by the amount of that increase.
OTA75\S2(10)(b) decrease = 拢50,000
Net clawback = 拢50,000