Chris Gautrey (CG) - ConocoPhillips UKOITC
Adam Cran (AC) - Shell UKOITC
Agustin Rivara (AR) - UKOOA
Jacqui Akinlosotu (JA) - - ENI OTAC
Stewart Norman (SN) CW Energy Brindex
Malcolm Phelps (MP) - LBS Oil and Gas
Alan Tume (AT) - LBS Oil and Gas
Diane Williams (DW) - LBS Oil and Gas
Mike Crabtree (MC) - LBS Oil and Gas
Niran Khera (NK) - LBS Oil and Gas
Paul Philip (PP) - LBS Oil and Gas
Tony Chanter (TC) - LBS Oil and Gas
Claire Roebuck (CR) - LBS Oil and Gas (minutes)
Russell Malloch (RM) - Local Compliance, Glasgow
Rob Douglas (RD) - HM Treasury
Mike Manderson - Talisman
Peter Gunn - Newfield Exploration Company
Ray Casanove - LBS Oil and Gas
MP welcomed everyone to the meeting. AT has joined LBS Oil and Gas from the Treasury; he has taken over John Mawson’s role. CG commented that there have been a number of personnel changes in LBS Oil and Gas recently.
Action point: MP to provide an update of LBS Oil and Gas personnel across direct, indirect and Employer Compliance staff, to CG.
The minutes from the last meeting were agreed.
RD reported that the Treasury are in discussions with industry bodies and individual companies regarding the discussion paper on the NS fiscal regime, released at budget. The discussions are ongoing until the end of September.
MC informed the Forum that the change of use group was set up in January, with Ray Hall leading from the industry side. A draft document, titled ‘Platform for Change’, has been prepared regarding the tax system ‘as is’ and how it applies if there is a change in use; there is also a section where industry has given their views on how the law would need to change. There will be a final meeting of the group in August, with the document being published in September, subject to ministerial agreement. MC commented that the group has been very productive. RD reported that industry’s representation in the document will be taken forward in the fiscal regime work.
Platts price reporting agency changed their methodology for calculating the Dated Brent price, creating uncertainty for industry. Andrew Parrock wrote to industry requesting PRT1A data for a limited range of deals to establish how the market was responding. The data were examined and a mechanism was established for calculating the Category One oil prices for June; these were published on the HMRC internet page on 27 July. The Forum agreed that this seemed to have gone well given the problems. The legislation regarding oil pricing may need to be changed as a result of Ekofisk being included in the Dated Brent price.
Discussion is going on between industry and Andrew Parrock regarding how LPG values are calculated. LPGs are traded differently between the three principal areas, meaning the LBS Oil and Gas price does not reflect the market. CG sent a note to industry last week asking for involvement in finding a workable way forward. The aim was that representations will be made to LBS Oil and Gas by the end of the year. The proposal is to make LPGs a Category One product, which would mean that LPG deals would no longer be required to be submitted on the PRT1A. MP suggested that given previous concerns, any proposal might also need to be run past the NAO. It is hoped that the formal mechanism would come into effect on 1 July 2008, if the change in LPG valuation is agreed.
Action point: CG to write to Andrew Parrock, copied to MC.
Industry reported that some companies are finding the information requests from LBS Oil and Gas, to support the case for PRT deregulation, onerous. TC was not aware of this; if companies are having issues with providing the information then they should discuss these with TC. TC informed the Forum that about a dozen fields have applied for deregulation.
CG enquired whether all the information currently requested on the PRT2 is still required as the new allocation rules mean that the terminal liftings figure on the PRT2s do not reflect what is submitted on the PRT1.
Action point: MP to consider the continuing requirement
for PRT2 returns.
The PRT1A is required for Category Two oils, and in addition for the June
Category One deals that were based on Platts.
A meeting was held in February to discuss supplementary charge anomalies. Shane Booth, from LBS Oil and Gas, wrote to industry in June. MC reported that a response is due back from Derek Leith.
Action point: Derek Leith to respond
There have been problems with Debt Management and Banking resulting from misallocations of money. MP asked industry to ensure that the correct reference numbers are used and contact details are provided in communications with Debt Management and Banking, and details are kept up to date. It was agreed that it is useful having CRMs in place to help resolve the issues. MP reported that a pilot has been carried out with a smaller sector, which may be rolled out in stages to Oil and Gas; MP will update industry on progress, in the meantime problems will be dealt with when they arise.
RM reported that no issues regarding queries had been brought to his attention. SN stated that the turnaround in correspondence had been slow, RM asked for specific cases to be highlighted to him. There has been an issue with interest credit on instalment payments; the system is being changed and CG has circulated a note on this. Any problems should be reported to RM.
Work is going on to rationalise whether businesses fall into LBS or Local Compliance, in regard to direct tax, indirect tax and employer compliance. If a company falls within LBS, it will be dealt with by LBS for all regimes. It is expected that the main PRT payers and all offshore contractors will be dealt with by LBS, with some smaller PRT companies transferring to Glasgow Local Compliance; decisions in principle will be made this month. MP will keep everyone informed.
MP reported that LBS is under pressure to meet the targets from the Varney review, which include treating 40 per cent of businesses as low risk by April 2008, decreasing resource in low risk cases and reducing the number of older and smaller issues. Also, risk review, at group level, will be shared with businesses by the end of the year. LBS Oil and Gas was targeted to meet its share of these aims.
Action plans will be shared with the business to achieve the target of having no more than 20% of open issues being more than 18 months old at 31 March 2008; CRMs will contact companies. Another target is to decrease the number of small, open issues by 75 per cent by April 2008. All sectors in LBS are taking a more structured approach to risk and resources. Local Compliance is heading in the same direction for its large and complex businesses, although the timing may be different.
LBS are aiming to resolve simpler transfer pricing issues within 18 months and more complex issues within three years. Industry was reminded that they have until 15 September to comment on the consultation document ‘HMRC approach to transfer pricing for large business’.
The ‘Giving Certainty to Business through Clearances and Advance Agreements’ document is out for consultation, the deadline for comments is 20 September. SN was concerned whether the output of the document will impact on the process and relationship that industry currently has with LBS Oil and Gas inspectors. MP anticipates the document resulting in a more joined up approach across the department and encouraged SN to comment on the document, requesting to be copied in on the response.
There was concern that an upgrade to shared workspace would impact on the PRT filing at the end of August but internal discussions had resulted in the postponement of the upgrade until early September to facilitate E filing. If companies are interested in using shared workspace they should contact their CRM. DW informed the Forum that most of the time delays in signing up to shared workspace are the result of concerns over IT security and the necessary discussions between the company’s and HMRC’s IT departments.
Action point: AC to let MP know of any security issues or impediment to filing.
HMRC and LBS have been running a series of events on future ways of working, resulting in a number of projects. AT is leading a project on low risk businesses and what this means for employer compliance and indirect tax in particular and would welcome input.
Action point: AT to write to CG requesting input from industry.
Another project, led by John Wildman, relates to training and development and for HMRC creating a good awareness of direct tax, indirect tax and employer compliance within LBS Oil and Gas. MP discussed ways in which HMRC can work with industry and proposed the ideas of sharing induction courses, tax and business training, or industry dealing with the business training and HMRC with the tax training. Industry commented that it may be useful and that it was an interesting idea.
Action point: MP to ask John Wildman to write to CG, requesting industry’s view on sharing training.
MP also referred the Forum to a NAO report on CT and large business, which was published on July 25.
Action point: MP to send a link to the NAO report to Forum members.
AT reported that the conference will take place on 7 November at Somerset House; invitations will be sent out in mid-September. The committee are now working on the agenda and require feedback from industry on the topics they would like to be discussed.
CG raised the issue of decommissioning and Section 29 Petroleum Act 1998, with regard to companies who are no longer a participator not being able to receive relief for PRT. RD confirmed that the Treasury are aware of this and are looking into it. Industry had a number of concerns, some of which were being addressed by the change of use group. They were invited to write to RD and MC in the usual way, prioritising their concerns, by the start of the autumn.
The next meeting will take place on Wednesday 24October at 2.30 pm.
