In his first Budget the Chancellor, Philip Hammond, will confirm that the UK Government will publish a discussion paper and establish a panel of industry experts to consider how tax can assist sales of oil and gas fields, helping to keep them productive for longer.
This comes after Oil and Gas UK, the industry representative body, have called for reforms to the rules saying: “Oil & Gas UK believes that more can be done to facilitate the transfer of assets in the basin and so stimulate additional investment. This is why industry is continuing to ask the Treasury to revise the tax treatment of decommissioning liability in support of this.”
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It also follows a recent letter from Derek Mackay to the Chancellor calling for reform in this area where he said: “There must be action to improve decommissioning tax relief, ensuring that the right assets are in the right hands”
These responses and the views of the expert panel will help the government consider options that will further help this vital industry that meets around 50% of the UK’s primary energy needs – building on the unprecedented support already provided to the oil and gas sector through £2.3 billion packages in the last three years.
UK Government minister for Scotland, Andrew Dunlop, said:
“This is really positive news for Scotland’s oil and gas industry. There are very significant reserves still in the North Sea, and it is vital that the UK Government does all it can to help the industry maximise these. Our oil and gas industry is very much open for business, and the North East of Scotland is a great place to invest. We need to ensure that our tax regime helps support the industry in the most appropriate way.”