Oil and Gas Industry Direct Tax Forum Quarterly Meeting

Thursday 22 January at 3.00 pm in room 5E1 22 Kingsway

Attendees

Kirsten White KW (Chairman UKOITC )
Chris Waterton (CW) Centrica UKOITC
Adam Cran (AC) Shell UKOITC
Peter Gunn (PGu) OGIA
Phil Greatrex (PG) CW Energy
Gordon Dennis (GD) Conocophillips UKOITC

LBS Oil and Gas

Malcolm Phelps (MP) LBS Oil and Gas
Peter Harrington (PH)
Diane Williams (DW)
Andrew Parrock (AP)
Paul Philip (PP)
Carrie Janes (CJ) Minutes

Apologies

Phil Slarks
Robert Douglas
Jacqui Akinlostu
Agustin Rivara
Russel Malloch
Graham Black
Sue New
Mike Crabtree
Tony Chanter

Agenda items

Introductions

MP welcomed everyone to the meeting and introduced Juliet Roche and Angela Roach from HMRC Central Policy. He also welcomed Kirsten White as the new chairman of UKOITC and co-chair of the forum and Peter Harrington returning as a CRM to LBS Oil and Gas.

PRESENTATION FROM CENTRAL POLICY

E filing and XBRL

AC - There are now three volunteers to attend the meeting regarding XBRL, names to be submitted to MP shortly. MP proposes that this meeting should be held within the next month.

MP - There have been issues surrounding submitting a return for a partnership. If Industry has any concerns regarding this subject please send to MP. MP to forward background information on the problem (now done).

Policy Update - Paul Philip

The contributions that had been received during the consultation process had been much appreciated and had been very constructive and helpful.

MC and RD had a meeting the previous week with the UKOITC sub-committee looking at the capital gains proposals. The meeting had been very useful and MC and RD would be taking the points made into consideration going forward.

PP explained that the policy team was currently working hard to produce draft legislation so that it could be published as soon as possible. The licence expiry draft legislation and explanatory notes were already on the HMRC website and it was anticipated that it should be possible to publish the Change of Use material the following week. All of the material is with Parliamentary Counsel (OPC) but they are extremely busy and the ability to publish depended largely on how quickly OPC were able to produce draft legislation.

The consultation period ends on 13 February 2009 - PP asked whether UKOITC would be co-ordinating an industry wide response or whether this might come from Oil & Gas UK? KW anticipated that there would be one response from UKOITC which Oil & Gas UK will have fed into.

PG indicated that there would be a separate response from Brindex.

Cushion Gas

CW asked when industry was likely to receive a response in relation to industry's concerns about the tax treatment of cushion gas? In addition CW asked what HMRC's and Treasury's policy response was likely to be?

PP explained that the particular technical issue was still being considered by HMRC solicitors and that industry would be advised of their view as soon as it was available. In terms of the policy response PP explained that this was a mater for HM Treasury and that at the Change of Use Working Group meeting on the 8 January RD had made it clear that he was not prepared to comment from a policy perspective until a response has been received from HMRC lawyers.

Operational matters

LPG Valuation - Andrew Parrock

There has been a recent response from a further company posing issues regarding how the proposed change to Category 1 would affect them. If after investigation this concern is valid then it might be better to keep LPGs within Category 2, but to change the valuation mechanism to a more 'Category 1 style', using PRA assessments and adding company-specific differentials to reflect the way each company sells its LPGs, Perhaps a trial period (like the trial period used when Brent pricing was changed to a PRA basis) would be a useful exercise. Any changes would have to be agreed by UKOITC. If this route was taken then there would not have to be any change in the legislation.

MP asked how soon this trial can start - AP replied that once the system is agreed it could start on the 1 July 2009. AP still wants any information that's outstanding to be submitted.

PRT 1A - If LPGs remained within Category 2 the statutory exemption from the need to supply sale information would not apply to them. However, given that HMRC might no longer need all the information previously provided to calculate LPG values, a reduction in the amount of data needed with respect to LPGs could be agreed in practice, as had been done for Category 1 crude before the change in FA2008.

LBS Performance Update - Malcolm Phelps

MP shared performance figures on settling old and small issues. The LBS as a whole had this as a RED area and LBS Oil and Gas needed to settle 73 more issues to reach its full share of the target on older issues and 18 more on small issues. He invited forum members to prioritise finalising outstanding issues in co-operation with CRMs and their teams.

Updating on the Oil Tax Manual - Diane Williams

DW explained that the Oil Tax Manual will be updated by the O&G team this year. The whole manual will need to be looked at with some parts needing to be completely rewritten, some edited and some removed. This is going to be a large task which will involve the whole of the O&G team. DW asked forum members if they would be happy to look over the manual after alterations have been made to provide a 'second pair of eyes'. Forum members were keen to see the proposed changes in 'track changes' to make the review task easier. This was not an opportunity as such to argue technical points but clearly if they did arise they could be taken forward separately. DW explained that the metadata that will be on the documents is unpleasant to look at but can't be removed. KW is going to look for volunteers and will pass names along.

AOB

The HMRC lead for the joint conference this year will be Susan New. It's possibly going to be held in Parliament Street (or Somerset House if accommodation there is still available). MP has asked the forum to suggest dates that are suitable.

There will be an internal trawl for Malcolm's successor imminently.

The next meeting is booked for the 21 April 2009 and is in room 5E/1 (N) 22 Kingsway. This meeting will run from 3.00 - 5.00 pm.

Carrie Janes