In today's Autumn Budget the Chancellor has announced a number of measures that will impact the Oil and Gas sector.
The first measure relates to the transferable tax history for oil and gas. The intention is to allow sellers of oil and gas assets to transfer their tax histories to a purchaser. Draft legislation will be produced in 2018 for enactment through the Finance Bill 2018-19. It is intended that the ability to transfer losses to potential buyers will help facilitate the transfer of late life assets thereby allowing further investment with the comfort of carried forward losses being available to reduce incomes assessable to ring-fenced corporation tax and the supplementary charge. This proposal had been discussed between the industry and the government following the publication of a discussion document by the Treasury after the Spring 2017 Budget in March of this year. This reform is being touted as a world first, demonstrating the commitment of the government to use the tax system to support greater investment."
The government will also launch a technical consultation on allowing a PRT deduction for decommissioning costs incurred by a previous licence holder.
Finally on tariff receipts, the government will legislate in Finance Bill 2017-18 to clarify that all tariff income earned by petroleum licence holders is within the ring fence corporation tax regime. There had been ambiguity on this point up to now which has led to confusion as to the availability of Investment Allowances and Cluster Area Allowance for Tariff recipients holding interest in PRT fields.