The measure
The government has today announced that it will publish a formal discussion paper on tax issues for late-life North Sea oil and gas assets, detailing its work on the perceived barriers to transfers of these assets and inviting comments on potential solutions. Alongside this, the government will also establish an expert panel to consider these issues and provide advice.
Who will be affected?
Businesses investing in oil and gas exploration and production activities on the UK continental shelf (UKCS) which are subject to the UK ring fence tax regime.
When?
The discussion paper will be released alongside Finance Bill 2017 on 20 March, with the expert panel reporting at Autumn Budget 2017.
Our view
It is crucial that the companies who are best placed to operate assets in the most efficient way possible are given the opportunity to obtain these assets as the UKCS enters its next phase of life.
Up until now, decommissioning tax relief issues have created barriers to entry for new entrants. Consequently, newer companies, potentially with alternative approaches, may not have been able to acquire appropriate assets.
The publication of this paper will be welcomed by the industry provided that it is backed up by legislative action encouraging new entrants for late-life assets and the development of alternative late-life business models.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
