Paul Winfrow (PW) Chairman UKOITC
Adam Cran (AC), Shell, UKOITC
Gordon Dennis (GD) ConocoPhillips, UKOITC
Chris Waterton (CW) Centrica UKOITC
Augustin Rivara (AR) OGUK
Jacqui Akinlosotu (JA) OTAC
Phil Greatrex (PGr) CW Energy
Peter Gunn (PGu) OGIA
David Edney (DE) Tax Law Rewrite
Malcolm Phelps (MP) LBS Oil and Gas
Sue New (SN)
Diane Williams (DW)
Mike Crabtree (MC) LBS Oil and Gas
Andrew Parrock (AP)
Paul Philip (PP) LBS Oil and Gas
Tony Chanter (TC)
Claire Roebuck (CR) minutes
Ray Casanove LBS Oil and Gas
Russell Malloch (RM) Local Compliance Glasgow
Robert Douglas (RD) H M Treasury
MP welcomed everyone to the meeting and formal introductions were made. SN was welcomed to the Forum; she has joined LBS Oil and Gas following on from Alan Tume’s move to Transport and ultimately to Alcohol and Tobacco.
DE informed the Forum that the draft rewrite for the ring fence CT legislation will be published within the next two weeks; comments are invited in the three months following. It is not proposed to rewrite the PRT legislation. The rewrite will form part of the second CT bill which is expected to be introduced in to parliament in autumn 2009 and be enacted in February 2010. DE reported that the rewrite includes Ss 492 – 502 ICTA, decommissioning (FA 1991) and the supplement rules in Schedule 19C ICTA introduced by S154 FA 2006. The rewrite also includes relevant parts of Finance Bill (now Finance Act) 2008 with the exception of capital allowances which come in to effect in 2011, and revised time limits, which come into effect by order. The draft rewrite will be published on the internet and DE will email the document to Forum members for comment.
Action point: MP to provide DE with the email addresses of Forum members.
The minutes from the last meeting were agreed.
Finance Bill 2008 should receive Royal Assent over the next week.
PW will be writing to MC shortly, providing information on the costs of decommissioning onshore fields. A meeting may be set up for early September, probably using Wytch Farm as an example.
The consultation period on the NS fiscal regime ended in June; BRINDEX and OTAC submitted responses prior to this and a few more companies have arranged meetings to discuss this on an individual basis. Although the consultation period has officially ended companies can still discuss this issue but should do so fairly quickly.
The Prime Minister and Chancellor have taken a keen interest in the changes by BERR to bring in the re-determination of field boundaries on economic grounds. The BERR website has information regarding the process, which involves a case being presented to BERR and then to HMRC. It is hoped that this process will be streamlined. CW commented that members were interested in arranging meetings, and although the questions raised mainly fell within BERR’s remit; joint meetings with HMRC may be appropriate. AR is meeting with the Treasury, HMRC and BERR on 22 July to discuss the process.
MC informed the Forum that the technical discussion paper, which provides suggestions on potential options, the changes needed and how they could be designed, is currently with ministers. Once it has received ministerial approval it will be published, hopefully in early September.
AP wrote to PW on 10 July 2008 providing an overview on the current situation and legislation and a possible solution for moving LPGs into category one; comments were requested by the end of September. PW has circulated the letter to members and has asked for a quick response from them; PW has not received any negative responses. It is anticipated that the earliest this could be brought into effect is for the chargeable period ending 30 June 2009; AP and MC will start drafting the changes in regulations now. AP thought it would be useful to have a period where the old and new processes run concurrently. AP stated that he would be particularly interested in industry’s comments on the transport element of the price. AC informed AP that an annual booklet is published that sets the price for transport for the year ahead.
Action point: AC to send AP and PW a note providing details of the transport cost publication.
MP wrote to PW on 10 July 2008 regarding the application of risk management for PRT; PW has distributed the letter but has not received any replies yet. PW commented that he had no objections to the principles of the letter but he found the field based approach unusual and that this leads to strange positions regarding having high and low risk participators within the same field, MP replied that the LBS guidance on risk is across the range of taxes for each customer and his letter translates the approach for PRT. MP stated that if the responsible person of a field has been classified as low risk then all of the field participants will receive the benefit of this, with regard to the schedule 5 claims. The treatment of schedule 6 claims will depend on the risk status of the individual company. This approach is an attempt to give companies the PRT benefits of being low risk. Industry welcomed having fewer burdens. The practical consequences of this approach would be that CRMs with significant PRT paying customers will take a higher profile in relation to PRT issues with the PRT specialist attending risk meetings. PRT risk is now therefore on CRMs’ agendas; it is not just down to the PRT team. The continuing need for reconciliations will be dealt with on a company by company basis as suggested in MP’s letter. NAO have raised no objections.
PGr enquired on the relationship of first claim audits and risk status; MP responded by saying that the first claim audit was designed to provide reassurance and not as a vehicle to prompt interventions by HMRC. It would continue to be necessary to complete an audit to feed into what was hoped to be the continuation of low risk status.
PGr asked how the LBS risk approach applies to smaller companies that are dealt with in Scotland. MP confirmed that companies which were classified as low risk and moved out of LBS to Local Compliance in Scotland will retain their low risk status. BRINDEX and OTAC will respond to MP’s letter raising this issue.
Action point: MP will send his letter to Russell Malloch in Local Compliance and they will decide on how the LBS approach translates to Local Compliance.
MP wrote to PW on 10 July 2008 with reference to potential areas for deregulation; PW has circulated the letter but has not received any response yet. AC reported that industry have come up with a list of deregulation areas to look into.
GD was aware that CT returns have to be submitted online by 2011, using XBRL (Extensible Business Reporting Language) and had heard that statutory accounts need to be filed in the same format; GD enquired if this was the case. PP had looked into this and confirmed that from 2011 it will be compulsory for CT returns to be filed in XBRL format; HMRC will continue to provide free software although third party software is also available. PP is asking for more detail from the Carter programme team and will keep everyone informed. GD will check with his contact if this covers the initial concern raised.
PW enquired on whether the capital allowances regime relating to integral features, introduced in Finance Bill 2008, is overridden by the ring fence rules. MC confirmed that the 100 per cent first year allowance within the ring fence overrides the new legislation.
Action point: MC to write to PW confirming the position.
MC wrote to industry regarding EU ETS; there had been a hold up in PW receiving the letter but he circulated it last week and has not received any replies yet. PW was disappointed with regard to the impact of schedule 4 paragraph 2. PW will respond to MC’s letter and will include a response regarding relief for penalties.
HMRC and UKOITC are jointly holding a meeting, on Friday 18 July, regarding the changes Platts have made to the pricing of Forties cargoes. Platts, Argus and Icis will attend along with members of industry; AP thanked PW for issuing the meeting invite. AP informed the Forum that he will need firm evidence on how the market has reacted to decide whether to remove Platts’ values from the statutory oil price calculations; at the end of the meeting AP will make a request for information for Forties deals on an early PRT1A, AP will also write to industry with this request.
MP informed the Forum that last year LBS Oil and Gas, working closely with customers, had exceeded its targets for settling old and small issues for 2007-08, and are in line with LBS as a whole in progress towards meeting this year’s targets.
DW confirmed that the annual conference will be held on Wednesday 5 November at Somerset House. The agenda is progressing and the interactive session will be on the re-determination of field boundaries.
There have been a number of changes to the National Business Director responsible for the LBS Oil and Gas sector; Ian Stewart was replaced by Freda Chaloner, who has since been promoted to LBS Director. She was replaced by Andrew Pardoe, who will now be taking early retirement. Graham Black will be taking on the role from September.
None.
The date of the next meeting has been changed and will now take place on Wednesday 22 October.
