HM Treasury has made available an alternative schedule to the decommissioning relief deed, for the purposes of allowing sellers to transfer their tax history to purchasers of an oil licence.
The transferable tax history mechanism, introduced by Finance Act 2019, allows sellers of oil licences to make a joint election for the transfer of their tax history to a purchaser, who is then able to set the decommissioning cost of the field against this tax history. The mechanism is available for licence transfers that receive approval from the Oil and Gas Authority (OGA) on or after 1 November 2018.
Where the seller has entered into a decommissioning relief deed, a valid election requires them also to enter into an alternative schedule, the purpose of which is to provide specifically that the total amount of tax history transferred is to be disregarded when determining the reference amount under the deed. The schedule prohibits companies from seeking to claim for transferred tax history through the decommissioning relief deed.
Decommissioning relief deeds, introduced in 2013, are agreements between the government and companies operating in the UK and UK continental shelf designed to provide oil and gas companies with certainty on the level of tax relief they will receive on future decommissioning costs.
HM Treasury has made available an alternative schedule to the decommissioning relief deed, for the purposes of allowing sellers to transfer their tax history to purchasers of an oil licence.
The transferable tax history mechanism, introduced by Finance Act 2019, allows sellers of oil licences to make a joint election for the transfer of their tax history to a purchaser, who is then able to set the decommissioning cost of the field against this tax history. The mechanism is available for licence transfers that receive approval from the Oil and Gas Authority (OGA) on or after 1 November 2018.
Where the seller has entered into a decommissioning relief deed, a valid election requires them also to enter into an alternative schedule, the purpose of which is to provide specifically that the total amount of tax history transferred is to be disregarded when determining the reference amount under the deed. The schedule prohibits companies from seeking to claim for transferred tax history through the decommissioning relief deed.
Decommissioning relief deeds, introduced in 2013, are agreements between the government and companies operating in the UK and UK continental shelf designed to provide oil and gas companies with certainty on the level of tax relief they will receive on future decommissioning costs.
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