Oil and Gas Industry Direct Tax Forum Quarterly Meeting
Wednesday 24 October 2007
Attendees
Chris Gautrey (CG) Conocophillips
Tim Murrills (TM) ExxonMobil
Mike Manderson (MM) Talisman
Peter Gunn (PG) Centrica
Sue Hanley (SH) (for Jacqui Akinlosotu)
Phil Greatrex (PRG) CW Energy
Agustin Rivara (AR) OGUK
Malcolm Phelps (MP) LBS Oil and Gas
Mike Crabtree (MC) LBS Oil and Gas
Paul Philip (PP) LBS Oil and Gas
Diane Williams (DW) LBS Oil and Gas
Alan Tume (AT) LBS Oil and Gas
Tony Chanter (TC) LBS Oil and Gas
Andrew Parrock (AP) LBS Oil and Gas
Helen Latham (HL) HMRC Central Policy
Tony Verran (TV) HMRC Tribunal Reform
Robert Douglas (RD) H M Treasury
Apologies
Ray Casanove LBS Oil and Gas
Jacqui Akinlosotu ENI
Agenda Items
Introductions
MP welcomed everyone to the meeting and following this, formal introductions were made. MP explained that Sam Baig has been appointed as the Dedicated Sector Lead support.
Tribunal Reform
Helen Latham gave a presentation on Tribunal Reform which covered an overview on the appeals processes two tier tribunal system and the HMRC consultation document, and provided background and a summary of the work undertaken by HMRC Central Policy. A slide handout was given for information and a copy is attached to these minutes. Responses to the consultative document are invited by 31 December 2007.
Notes of last meeting and points arising
The minutes of the last meeting held on the 31 July 2007 were agreed.
Points arising from the minutes are as follows.
LPG
The discussion between industry and Andrew Parrock on how LPG values are calculated continues. The proposal is to make LPGs a Category One product, and it is still hoped that the formal mechanism would come in to effect on the 1July 2008.
PRT Deregulation
This item related to the reduced return requirements for non PRT paying fields. At the last meeting it had been reported that that some companies were finding the information requirements agreed jointly between industry and LBS Oil and Gas onerous. However there had been no further feedback and generally things seem to be working well.
On the PRT2 return LBS Oil and Gas explained why they thought the form might still be needed. CG has passed this to the deregulation group to deal with and will report back.
PRG questioned whether PRT 1As were still necessary for all Category two fields. AP indicated that it was the LBS Oil and Gas view that they were, but he was prepared to consider the position if companies could demonstrate otherwise.
Training and Development
AT is leading a project on regime integrity and mandatory work with particular reference to low risk businesses and what this means for employer compliance and indirect taxes as well as for direct tax. AT had written to CG requesting input from the industry. CG referred to the letter which he felt was a little unclear as to its scope.
Action Point: AT to write to CG clarifying what he was interested in.
Supplementary charge anomalies
Shane Booth from LBS Oil and Gas had written to Industry in June on supplementary charge anomalies. MC was awaiting for a response due back from Derek Leith but to date no reply has been received. CG confirmed he would make enquiries for an update.
Policy developments
PBR
RD provided an update following PBR. He explained that following the lengthy and helpful consultations, Treasury and HMRC were digesting the responses. It was expected that a consultation document would be issued in due course.
Change of Use
MC thanked industry for its very constructive input to the change of use working group. There were still some drafting points on the document but it was hoped that it would be published within the next few weeks. The document looks at how current legislation applies if there is a change in use, for example in relation to Capital Allowances, treatment of losses and gas storage and sets out the changes in law that industry believe necessary to ensure the tax system operates fairly in respect of such projects.
Decommissioning – UKOITC note
RD thanked UKOITC for the helpful note on decommissioning which fed into the review of the fiscal regime.
PBR simplification announcements
RD referred to the simplification announcement at PBR and provided paper copies of the handout that MP had shared with CG before the meeting. The industry was invited to provide feedback in relation to specific oil sector legislation.
Operational matters
Oil pricing
AP reported on how the glitch in oil pricing in June for category one oils had been dealt with. There was to be a meeting on 2 November organised by Platts which HMRC would attend as observers.
Liaison with Glasgow local compliance
RM reported that no significant issues have been brought forward.
LBS Population and Geography
Following a review of the businesses dealt with in the LBS following merger of IR and C&E (The LBS Population Project) MP confirmed that there would be some changes. The basic principle was that businesses would either be dealt with wholly within LBS or wholly in local compliance with a broad size test based on turnover and capitalisation. However the specialised nature of oil taxes would also be recognised. The main changes related to indirect taxes and the close relationship with local compliance Glasgow was expected to continue. Changes, both in and out, were expected to be made by the 31 March 2008
A separate Geographical review will rationalise the number of sites at which LBS is represented. This will not affect direct taxes but all indirect tax posts in the South-East will be located in 22 Kingsway – around 25 posts will move under these arrangements in 2008. LBS Oil and Gas will retain posts based in Liverpool, Pembroke, Immingham and Edinburgh.
CG suggested that MP write to Steve Hur (chair of indirect UKOITC) as well.
Action Point: MP to write to Steve with the above information.
Review of links up date
LBS targets
MP stated that LBS is expected to meet the targets set out in the Varney Review, which includes treating 40 percent of businesses as low risk by April 2008. The review also recommends shifting resource from low risk to higher risk customers and to ensure that there is a reduction in the number of older and smaller issues. Targets are settling 70percent of issues that were over six months old at 31 March 2007 by 31 March 2008 and a 75 percent decrease in the number of small open issues by Aril 2008.
MP reported that working closely with industry, LBS Oil and Gas has presently achieved 44 percent of the smaller open issues target which is a little behind a straight line graph for the year which would suggest we should have cleared 48.7 percent. Similarly, on older issues Oil and Gas has currently settled 41 percent currently compared with a straight-line projection of 44.3 percent. Industry can expect some pressure from CRMs inviting co-operation from industry as they strive to meet these targets.
The new risk reviews are required to be completed by the CRMs by 31 December 07 so tax managers should expect meetings to be set up shortly if they have not already been arranged. CRMs had reported confidence in being able to view 40 percent of customers as low risk by 31 March 2008.
MP explained that some shift of resource from low to higher risk customers had already taken place.
Shared Workspace update
MP referred to the upgrade to Shared workspace and asked whether any problems had been thrown up. None were reported at the meeting although after the meeting there was some evidence that the necessary formal password letters had been held up by the postal strike.
Annual Conference
The Annual Conference would take place on the 7 November at Somerset House. Melanie Dawes would be attending along with HMRC and Industry representatives.
Date of next meeting
The next meeting is scheduled to take place on Tuesday 22 January 2008 at 2.30pm.
