The Advance Petroleum Revenue Tax Act implemented the proposal announced by the Chancellor of the Exchequer in the Autumn Statement to accelerate, on a targeted basis, the arrangements for the repayment of advance petroleum revenue tax due to oil companies.

[1] The fall in world oil prices in 1986 had a serious impact on the economics of North Sea development, resulting in cutbacks in activity.

Companies involved in North Sea activity had reassessed their plans to take low oil prices into account, but some of them faced the more immediate problems caused by a shortage of the cash available to go ahead with new and existing developments.

It concentrated its effects on those companies where the reduction in cash flow from their North Sea operations could act as a real constraint on their ability to go ahead with development work.

It also recognised the importance of providing finance for the companies as soon as possible in order to avoid any interruption to development activity by cash flow difficulties.