Reforming the decommissioning tax relief system would create a “sweet spot” for the UK Government and the oil and gas sector, an industry expert has said.
Mike Tholen, upstream policy director at Oil and Gas UK, said allowing companies to transfer their tax histories “would not cost the UK Government anything” and offers opportunities to new North Sea investors.
In the Spring Budget, Chancellor Philip Hammond said an expert panel would consider letting companies benefit from tax reliefs built up by would-be sellers of mature fields.
Yesterday, Andrew Jones, exchequer secretary to the Treasury, revealed that the panel had met four times over summer and confirmed its findings would be reported in the Autumn Budget.
Mr Jones also reaffirmed the government’s commitment to supporting North Sea industry by maintaining a “stable and predictable” fiscal regime.
Speaking on the sidelines of Offshore Europe 2017, Mr Tholen said: “It’s good that Mr Jones was talking about having a stable and predictable tax regime.
“From an investor perspective, we want the tax regime to be competitive and boring.
“It’s also positive that he sees the benefit of attracting new investors to the North Sea.
“The government is clearly focused on decommissioning, which makes sense because it is a big cost, but it also sees it as an opportunity for attracting new investors.”
Mr Tholen said he was “delighted” to hear the government is looking at “fine tuning” the fiscal regime with respect to decommissioning.
He said: “If a company which is looking to buy an oil field can get access to the field’s tax history, then they can benefit from tax reliefs, which makes the North Sea more attractive to newcomers.”
Mr Tholen said he was optimistic that Westminster will deliver on transferable tax histories and that “we will stop talking about it and see it as part of the tax code”.