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BP Business Economic Loss Claim Appeal 2017-251: Similarly-Named Companies Operated At Arm’s Length

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The following is an Appeal Panel Decision issued pursuant to Section 6 of the BP Deepwater Horizon Economic & Property Damages Settlement Agreement and the Rules Governing the BP Appeals Process. Links may have been added to assist the reader. The original decision may be found here, as well as a glossary of BP Settlement terms


BP appeals the BEL award to claimant, a computer software company in Clearwater, Florida. BP asserts the Settlement Program(SP) wrongfully failed to consider and exclude revenues from a related out-of-zone facility in the United Kingdom as evidenced by foreign tax credits listed on claimant’s federal tax returns.
Claimant argues that the SP diligently reviewed and analyzed claimant’s records and did not fail to address any related company out-of-zone transactions. A review of the record discloses that the company located in the United Kingdom,while bearing a name similar to claimant’s, is a separate and distinct company from claimant. It was
created several years after claimant,has different officers and maintains its records separately from claimant. Any transactions between the two entities appear to be arm’s length transactions and the SP treated them as such. See paragraph 12 of Calculation Notes.
As such, DWH Accountant classified the accounts as COGS-Variable”. Thus, the SP treated these expenses as normal, operating business expenses. Finally, the foreign tax credit listed on claimant’s 2007 and 2008 federal tax returns represent a tax credit on income earned from royalties on software designed and produced by claimant
at its domestic headquarters and should not have been excluded.
There is nothing in this record to link that income to an associated business with whom claimant had less than arm’s length transactions. Even if there were such indications, the SP was satisfied the claimant operated at arm’s length to it. Parenthetically,it should be noted that this royalty income represents around 1% of claimant’s gross revenues for the years 2007 and 2008 and would have little impact on the award calculation even if wrongfully included. Such miniscule impact would
offer little support for BP’s zero dollar final proposal in this baseball appeal process.
The final proposal of claimant is closer to the mark. Accordingly, the decision of the Claims Administrator is affirmed and the appeal of BP is denied.

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