North Sea Change of Use Working Group – A Technical Paper
HMRC today (Thursday 15 November) published “Platform for Change”, the product of a joint working group comprising HMRC, the Oil and Gas Industry and BERR, which was set up to consider how current tax legislation would apply when North Sea oil and gas infrastructure is used for other purposes, such as carbon capture and storage, wind power and gas storage.
We hope this will be of considerable benefit to those companies seeking to invest in change of use projects. The aim of the paper is to remove uncertainty over tax treatment in a number of areas and provide tax certainty to be fed into the companies’ economic projections, enabling them to more accurately appraise change of use projects.
The document Platform for change (PDF 236K) is primarily a technical paper detailing how current legislation would apply, but it also contains suggestions made by industry for legislative changes, which they believe are required to make change of use projects effective. Further discussion with industry is required to fully consider their proposals.
Angela Eagle, Exchequer Secretary to the Treasury, welcomed the report, saying, "As the Stern Report highlighted adapting existing technology is one of the keys to success in tackling climate change. Today's technical paper provides clarity for the North Sea Industry on the tax treatment if they adapt their existing equipment for green purposes, and will give them the vital certainty they need to take these projects forward. This is also an excellent example of what can be achieved when Government and Industry work together and I thank all those who participated."
Ray Hall of BP, who led the industry side of the group said ''The working group proved to be a very constructive process in providing clarity on existing legislation which is essential for prospective investors considering change of use activities. Existing legislation for oil and gas extraction never anticipated the change of use activities that are being developed today and Industry have made a number of recommendations for legislative change to remove existing fiscal barriers. It is important that Government follows through and introduces legislation to give effect to the Industry recommendations particularly in respect of the treatment of decommissioning.''
If Oil and Gas companies are considering a change of use project and have questions or require further clarification on the tax treatment of their projects, they should initially contact their Client Relationship Manager (CRMs).
Other enquiries to:
Mike Crabtree,
Head of North Sea Policy Team,
LBS Oil and Gas
22 Kingsway
London
WC2B 6NR
Tel: 020 7438 6576
