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This analysis is part of the Lexis®PSL Tax team’s summary of the Autumn Budget 2017. Some of the links require a LexisPSL subscription. If you are not a subscriber, you can take a free trial here.
Oil and gas
Following a consultation in spring 2017, the government intends to legislate to enable sellers of oil and gas fields to transfer some of their tax payment histories to the buyers of those fields. This is intended to facilitate the transfer of these assets by enabling buyers to set the costs of decommissioning oil and gas fields at the end of their lives against the sellers’ tax histories. Draft legislation will be published in spring 2018 for inclusion in FB 2019, with the intention that the measures will take effect from 1 November 2018. For information on the previous consultation, see News Analysis: How should late-life oil and gas assets be taxed?
The government will consult in spring 2018 on allowing a petroleum revenue tax (PRT) deduction for decommissioning costs incurred by a previous licence holder, to support transfers of assets where the seller retains the decommissioning liability. For background information on PRT, see Practice Note: Petroleum revenue tax.
In addition, FB 2018 will make it clear that all tariff income (income earned from third parties for the use of assets, such as pipelines) is within the ring fence corporation tax regime. This change will take effect for accounting periods beginning on or after 1 January 2018 and is intended to support the government’s commitment to extend investment and cluster allowances to include tariff income. For information on investment and cluster allowances, see Practice Note: Oil and gas—corporation tax and the supplementary charge—Investment allowances (formerly field allowances).
See: Autumn Budget 2017 (paras 3.54, 3.55 and 3.56), OOTLAR (paras 2.29 and 2.30),TIIN: Ring fence corporation tax: tariff receipts and HM Treasury policy paper: An outline of transferable tax history.
Further Guidance
LexisPSL subscribers can access all analysis and insight on the Autumn Budget 2017. If you are not a subscriber, you can take a free trial here.
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