Chris Gautrey (CG) - Conoco Phillips - UKOITC
Phil Greatrex (PG) - CW Energy - Brindex
Agustin Rivara (AR) - UKOOA
Nigel Halls (NH) - ExxonMobil - UKOITC
Chris Waterton (CW) - Maersk - OTAC
Owen Roberts (OR) -Shell - UKOITC
Malcolm Phelps (MP) - LBS Oil and Gas
John Mawson (JM) - LBS Oil and Gas
Tony Chanter (TC) - LBS Oil and Gas
Ruth Bulteel (RB) - LBS Oil and Gas
Mike Crabtree (MC) - LBS Oil and Gas
Terry Holwill( TH) - LBS Oil and Gas
Jo Wakeman (JW) - H M Treasury
Jonathan Bates (JB) - Large Business and Employers Customer Unit
Fernando Esteve - BG
David Cooper - LBS Oil and Gas
Mike Hamilton - LBS Oil and Gas
Ray Casanove - LBS Oil and Gas
All attendees introduced themselves.
JW wanted to place on record her gratitude to Industry for their substantial input and constructive thoughts on the review of the North Sea fiscal regime. She said that she was in the process of gathering conclusions from discussions to put to Ministers.
JW said it was not appropriate to describe possible options at this stage but the “do nothing” option will be put forward with others. JW said it would not be appropriate to give a timescale at the moment but HMT would get back to Industry as soon as there was more to say. She could not comment at this stage on what might or might not be said at PBR.
CG asked how the proposals in Rob Douglas’s letter concerning exempting certain oilfields from PRT fitted with there being no general announcement yet following the review. JW said HMT/HMRC think there is a case for change independently of the review. This could be viewed as an anomaly in investment opportunities which is why it makes sense for it to be taken out of the context of the more far reaching discussions. CW asked if they could still have input into this proposal. JW said that if industry had specific issues they should raise them as soon as possible. One of the drivers was to keep any changes as simple as possible.
More generally, AR said that UKOOA would like to continue conversations
for example in the pilot working group on Decommissioning Security Agreements.
CG asked about the HMT response to the carbon capture and storage consultation.
JW thought there was a document summarising responses. She would check and
see if it has gone out. She expected an announcement by the end of the year
if not at PBR.
JW said she is moving on promotion to another job within HMRC. Rob Douglas will be looking after North Sea matters for HMT until a successor is appointed. CG asked to record Industry’s thanks for JW’s hard work and help and wished her good luck in her new job. This was echoed by MP for HMRC. Rob Douglas will be at the forthcoming joint conference in place of JW.
MC referred to the oil pricing regulations and CG’s letter of 13 October. There were a couple of points he would respond to. Regulations need to be laid before Parliament in mid to late November so scaling this timescale back to include Ministerial agreement, HMRC need to have final views within the next couple of weeks. MC apologised for the tight timescale. The Regulations on pricing and nominations can be sent to Industry tomorrow and the other Regulations on terminal liftings by the end of next week. There are no material changes from the previous versions but the layout has been changed to make them easier to read. MP confirmed CG’s presumption that there would be an opportunity to make amendments in due course.
PG asked if HMRC have been able to take on all of Industry’s views. MC confirmed that pretty much all of their views were taken on board. This is not now an appropriate time for reopening substantive discussion but in circulating the current version MC will point out the changes made. HMRC are drawing some comfort from the fact that everyone seems to be operating the rules without insurmountable problems at the moment.
MC referred to CG’s letter on availability of losses under the Supplementary Charge rules and said he written asking for further flesh on the bones. CG said he would be responding shortly.
MC said he would like UKOITC’s views on setting up a working group to look at change of use issues. The main problem areas seem to be fiscal impact, how do tax rules work, PRT, decommissioning reliefs and ring fence issues. The idea would be to identify what the issues are, where we agree and where we differ and to bring some degree of clarity to the subject. CG said that his initial reaction was that this would be a good idea. There are an increasing number of issues where the industry needs certainty. MC said he would write to UKOITC setting out the issues as HMRC sees them and this would allow them to add any of their own. PG said that ideally he would like some guarantee that issues identified would actually be addressed.
MP introduced Alain Gray (AG) for this agenda item. AG gave a very high level view of shared workspace and said copies of the presentation are available if required.
AG said he proposes to put Oil & Gas at front of the queue for the project roll-out and if agreed in principle he will organise a senior awareness event in early 2007 for businesses who were interested. CG said that it looked as if this was something businesses ought to welcome. He asked for information for dissemination. MP will send a copy of the presentation and more information in a letter. AR said they have a similar system at UKOOA and it works well.
PG asked if the topic could be included in the conference on 8th November. MP said he will confer with Ray Casanove and see if it could be slotted in somewhere. (The topic was included)
AG said a welcome pack would go out and we would like to invite, say, the head of tax with representatives from the Direct and Indirect side, MP confirmed that HMRC would like everyone to have the opportunity to sign up and confirmed that there would be no problem with licences. Companies dealt with by HMRC in Glasgow would not be included at this stage.
Agreed.
JB thanked people for input and confirmed that UKOITC views have been taken into account. Some of the themes were touched on in David Garlick’s response of 6th October to the joint letter from CG and Steve Hur.
Although JB talked about the likely content of the report, as it has now been published, here is a link http://www.hmrc.gov.uk/large-business/review-outcomes.htm
JB confirmed there will be opportunities for debate about the detail of implementation.
CG asked if there was anything further to report. MP said there was nothing new. Risk assessment process was still in progress and Industry should expect a fairly standardised approach.
CG asked about risk scoring. Is it something they should know about? JM
said that scoring gave an indication of the level of risk but the risk score
itself would not be shared. However there should still be useful dialogue
around a risk review template. MP said HMRC will allocate resource where there
is a high risk but would apply a light touch where there is low risk. Results
of risks reviews should be shared with businesses by the end of year. The
onus is on the CRM to get in touch with companies but MP said companies should
feel free to chase the CRM up although he hoped this would not be necessary.
CG said it was very early to give meaningful feedback as to the pros and cons
of the LBS model which is still work in progress. One concern is to have a
clear understanding of the authority held by CRMs and the interaction with
Sector leaders in particular. MP said that CRMs were intended as the single
point of responsibility for businesses across HMRC but some of the detail
of how that would work in practice is work in progress. He viewed his own
role as similar to Ian Stewart’s but of course he now had wider overall
responsibilities in relation to indirect tax operational matters.
MP introduced this topic which resulted from concerns within business generally that HMRC does not understand how business operates. HMRC would like all Senior Civil Servants to spend up to a week with business. This would be extended to include all CRMs if possible. An Oil and Gas business might have opportunities which would be valuable to someone in different part of HMRC form the LBS and he did not generally expect people to be based in tax departments. MP handed out an information sheet for forum members to take away and consider. Businesses that thought they might be able to offer something should contact MP or their CRM.
CG asked if this was happening elsewhere. RB said she had been involved with one of the pilot “Week in Business” initiatives which was sponsored by Dave Hartnett in partnership with the CBI. She had been working in Business Tax policy with a particular interest in small businesses and farms. She had spent a week with the Cumbrian Tourist Board. She talked to a variety of businesses about the impact on their business of tax, NICs, VAT and the regulatory burden in particular of EU grants and legislation. She had found it extremely useful and so had the Cumbrian Tourist Board.
CG did not think the initiative would have universal appeal and wondered if anyone would get enough from just a week’s visit. PG thought maybe you would get more from visiting a small business? RB said she had talked to others who have taken part in the initiative and they all did totally different things. MC had had a visit to an oil rig and found it fascinating. CG said it might be easier to arrange a visit to an oil rig or refinery than to have someone shadowing. CG asked MP to put in a letter the sort of things that might be considered.
On a related topic (under AOB), MP mentioned that he has staff who are unfamiliar with different parts of the tax system or the oil industry generally and he has to consider what training is necessary. He wondered whether businesses might offer scope for MP sending his people along to induction or training courses. CG suggested MP mentions this in his letter on the topic generally. MP was happy to borrow videos etc. AR said he would ask within UKOOA.
MP said he had sent a link to the HMRC website and forum members reported that it worked. CG had sent suggested terms of reference which MP would consider. The intention is that we will put minutes of meetings on the website. CG said he would like a rider that the minutes were prepared by HMRC. MP said that he did not have any problem in principle but he would still like the minutes to be agreed if possible before they go public. Any sensitive information would be excluded by agreement from the public version.
PG asked if representatives from Scotland local compliance could be invited to future meetings. MP agreed.
There has been further correspondence with MC on this topic and a useful meeting between Neville Howlett, the oil and gas policy team and CT & VAT specialists. MC said there were concerns at the lack of an accounting standard but there was a certain amount of “watch this space” for filing of 2005 accounts. TC said he had not yet seen many claims for PRT relief.
TC reported on a very constructive meeting held recently on a practical approach to extending the range of oil fields to which S102 FA might apply. Another meeting would take place early next month to take matters forward.
JM reported that 97% of expected 2004 returns had now been received compared with 93% last year. This represents good progress although the build up had been slower this year than last.
PG said there were allocation problems at Shipley. He reported an example where a 2006 CT payment on account was reallocated for no apparent reason to 2002 creating a large overpayment. This had caused lots of problems. MP said if a list of cases could be provided that might provide an opportunity to open a dialogue with the accounts office about what might be done to prevent these problems recurring.
Everyone has had their invitations and the agenda is finalised.
The possibility of attendance of HMRC people at industry induction courses was mentioned under AOB but is covered in para 6 above.
17 January 2007 at 2:30.
Malcolm Phelps
Sector Leader
Large Business Service
Oil and Gas
