Industry body ‘hopeful’ over bareboat tax resolution

Malcolm Webb, Oil and Gas UK's chief executive
Malcolm Webb, Oil and Gas UK's chief executive

Trade body Oil and Gas UK has said it remains “hopeful” of resolving a dispute with the Treasury over plans which could cost the offshore industry £1billion.

The Press & Journal reported yesterday that anger was growing in the North Sea sector over Westminster’s bareboat charter tax proposal.

Documents showed Oil and Gas UK and the International Association of Drilling Contractors lobbied for a U-turn on the move.

Malcolm Webb, chief executive of Oil and Gas UK, issued a statement last night saying: “On first learning of this possible bareboat tax measure, Oil and Gas UK asked for it to be reconsidered.

“Following further discussion of the matter at a Fiscal Forum meeting, the economic secretary to the Treasury on February 3 opened a full consultation with the industry.

“Oil and Gas UK applauds the UK Government on the breadth of its consultation. Nobody should consider this matter as having yet concluded.”

Mr Webb added: “We remain hopeful of a satisfactory outcome.

A rig is bareboat chartered if it is without operating personnel, from an overseas company, and HM Revenue and Customs has accepted that the owner is not carrying out any North Sea activity so as to be chargeable to UK tax. The operating company will claim a deduction for rig rentals in computing its profits.

The proposed new measure caps the amount that independent offshore contractors may deduct against their corporation tax liability from the leasing of oil and gas capital equipment, primarily drilling rigs, from April.