As many Stockopedia readers have investments linked to North Sea oil and gas assets, it seems worth examining the changes announced in the Budget in some detail.

Those details can be found in the 240 page budget overview (tax simplification, anyone?). Here is what I've found:

 

Starting with page 3:

 


Oil and Gas Taxes


1.13 Supplementary charge — Legislation, effective from 24 March 2011, will be introduced in Finance Bill 2011 to increase the rate of the supplementary charge levied on profits from UK oil and gas production from 20 per cent to 32 per cent. As part of the fair fuel stabiliser, if in future years the oil price falls below a set trigger price on a sustained basis, the Government will reduce the supplementary charge back towards 20 per cent on a staged and affordable basis while prices remain low. The Government believes that a trigger price of US $75 per barrel would be appropriate, and will set a final level and mechanism after seeking the views of oil and gas companies and motoring groups. A Tax Information and Impact Note for this measure is available at Annex A. Chapter 3 includes further information on North Sea oil taxation.


1.14 Oil and gas: intangible fixed assets — Legislation, effective from 23 March 2011, will be introduced in Finance Bill 2011 which will ensure that the scope of the corporate intangible fixed asset (IFA) rules excludes all goodwill and any intangible asset which relates to, derives from or is connected with an oil licence or an interest in an oil licence. The legislation is needed because some companies have interpreted accountancy practice in such a way that goodwill is recognised on the acquisition of an oil licence or an interest in an oil licence. This interpretation may bring this goodwill within the scope of the IFA regime which conflicts with what was intended when the legislation was introduced. Draft legislation has been published on 23 March 2011 on the HMRC website and a Tax Information and Impact Note for this measure is available at Annex A.

 

 

1.13 - Aarrghh!!!; 1.14 - needs a tax expert to interpret but suggests to me that companies may find it harder to recover costs of licences acquired against tax.

p14:

 


Oil and Gas Taxes


2.17…

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