Paul Winfrow (PW) Chairman UKOITC
Chris Waterton (CW) Centrica UKOITC
Adam Cran (AC) Shell, UKOITC
Peter Gunn (PGu) OGIA
Phil Slarks (PS) HMT
Robert Douglas (RD) HMT
Phil Greatrex (PG) CW Energy
Jacqui Akinlostu (JA) OTAC
Agustin Rivara (AR) OGUK
Carol Lunney (CL) CT & VAT
Russell Malloch (RM) Local Compliance – Large & Complex
Graham Black (GB) LBS National Business Director C
Malcolm Phelps (MP) LBS Oil and Gas
Sue New (SN)
Diane Williams (DW)
Mike Crabtree (MC)
Andrew Parrock (AP)
Paul Philip (PP) Oil and Gas
Tony Chanter (TC)
Susan Hance (SH) minutes
Gordon Dennis (GD)
Mike Manderson (MM)
MP welcomed everyone to the meeting and formal introductions were made including Graham Black as the new National Business Director in the LBS.
CL gave a presentation regarding the mandatory XBRL e-filing for all CT returns and accounts. Lord Carter had recommended online filing of company’s CT tax return and accounts and that there should be a mandatory date fixed for all companies. Originally this was set for returns filed on or after 1 April 2010 but this has now been changed to 1 April 2011. There was general agreement that this was very tight time-table. At the moment only 14 per cent of companies file CT returns online with 86 per cent filing on paper. There was some discussion on perceived difficulties with mandatory XBRL filing for specialised areas such as the Oil Industry. CL explained that taxonomies based on a variety of International Accounting standards had been built up as had the taxonomy for the CT computation. These were being considered with commercial software developers. The team would be keen to talk both to the industry and to the specialists in HMRC in the Oil and Gas (and other sectors). MP suggested the industry consider putting together a sub-committee on this issue and he would put them in touch with CL’s team. LBS Oil and Gas would separately look at the taxonomy from a technical viewpoint.
The Oil and Gas sector has paid significant CT and PRT although the recent fall in the oil price may affect the rest of the financial year. Industry representatives reported that bank finance is getting more difficult for smaller players in the current financial climate and banks are also trying to change the terms of agreements. This means that companies are finding it difficult to find money for more developments. It was hoped that things would start to ease and be able to create more expansion. The Rig market is tied up for the next couple of years, but as more rigs are coming on to the market, prices should go down. Companies are not renting rigs for the long term.
HMRC/HMT have spoken to a range of companies over the summer. The hope was that a statement will be made at PBR. It was also hoped, subject to ministers' agreement that significant issues would be addressed in the 2009 finance bill. These might include the familiar decommissioning problems such as Decommissioning relief (PRT) for costs incurred by licensees post licence expiry. Legislation would be shared in draft.
HMRC/HMT are aware of the urgency for a considered view on the treatment of Cushion gas.
MC referred to his letter of 3 October. While it would not be possible to take forward all the issues in the next Finance Bill, HMRC/HMT were keen to take the opportunity to deregulate early where possible and to continue the dialogue offered on other matters.
AP reported that in September this year Platts changed their discount factor in relation to Brent deriving from inclusion of Buzzard oil from 60 cents to 40 cents. It had not proved necessary on this occasion to alter the category 1 pricing methodology. No difficulties were perceived by industry with HMRC’s approach so far. AP would continue to monitor the position.
There have been three responses from AP’s letter on changing the LPG methodology. It looked as if the Argus index may be used. AP will reply as soon as possible to the 2 October letter.
PW said that he had not realised that that there was a need to reply to the letter written by MP on 10 July 2008 but confirmed that everyone was content to adopt the approach suggested and to report any problems.
MP gave an update on LBS performance targets for settling older and smaller issues deriving from the Review of Links with Large Business. For old issues, the LBS target was to settle 70 per cent for the year. Oil and Gas had settled 20 per cent. On smaller issues, the LBS target was to settle 80 per cent. Oil and Gas were currently at 27 per cent. It was getting tougher to settle some of the more complex issues MP said that businesses can expect to get pressure from CRM’s to settle risks sooner rather that later reflecting the pressure he was putting on them.
PP explained that this item was about awareness of the work that was being taken forward by various consultation exercises.
There was a lot of work going forward from various consultations including Tax Law Rewrite, Tribunal Reform, Review of Powers (which includes compliance checks and penalties) and Interest – working towards a harmonised regime.
It was thought likely that industry had engaged with the various projects, and had provided the appropriate input, but it was important that if they felt they hadn’t been they should advise HMRC so that the appropriate contacts could be made. PP also referred to the HMRC website and suggested it was worth checking from time to time as requests for engagement, and updates on the various consultation exercises would be posted there.
Industry’s main concern was that it was not always clear whether a particular project or consultation would affect oil and gas companies. There had been instances where, on the face of it, a particular consultation exercise would have no impact, and require no input. They would however discover much later that there was an aspect that could have a significant impact that they had been unable to comment on, and that created a significant risk for the industry. Following some discussion, and in response to this concern, it was agreed HMRC would review the existing consultation exercises and alert industry to those it should be engaging with.
It was reported that the meeting with integration with business tax had gone well. PW reported that there was one remaining concern regarding royalties. DW said that he spoke to her colleague in CT and VAT and expects to see a draft response shortly. MP asked that he and MC see the proposed response in draft.
PW reported that Kirsten White of Shell will be replacing him as UKOITC chairman with Adam Cran as secretary.
MP thanked to Paul and Chris for their input to these meetings and for everything they have done over the years.The date of the next meeting was set for 22 January 2009 at 1500.
Room 5E/1(N) 22 Kingsway had been booked.
Susan Hance
November 2008
