The recent First-tier Tribunal case of Perenco UK Ltd v HMRC determined that payments made by the user field owners under a transportation and processing agreement (TPA), in respect of the user field’s share of the owner’s capital expenditure did not amount to a subsidy for PRT purposes under Paragraph 8(1) of Schedule 3 OTA 1975. The case concerned payments made to Perenco, as the owner of the Dimlington terminal, by a number of user fields under various TPAs in […]

On 1 July 2021, a statement providing a framework for reform of the international tax rules was published by the OECD/G20. The statement has been approved by 132 countries. A comprehensive agreement is to be finalised by October 2021 with changes coming into effect in 2023. The statement was short in detail (it was only 5 pages long), however, we set out below what is understood to be the current intention for how this reform (described as a two-pillar approach) […]

On 7 May IASB published limited scope amendments to the application of the Initial recognition Exemption (IRE) to transactions which give rise to taxable and deductible temporary differences of the same amount. This is primarily aimed at deferred tax arising on decommissioning obligations and leases but is also relevant for other transactions. In the past, there had been some uncertainty about whether the initial recognition exemption applied to transactions such as leases and decommissioning obligations, i.e. transactions for which companies […]

The recent First-tier Tribunal (‘FTT’) decision in M Group Holdings Limited v HMRC is a salutary reminder that there are a number of detailed conditions that need to be met in order for the substantial shareholdings exemption (‘SSE’) to apply to the disposal of shares by a corporate shareholder. SSE background The chargeable gains tax regime was changed in 2011 to allow a group to reorganise its trading operations and qualify for a tax exemption under the SSE rules. For example, […]

HMRC published a summary of responses to the first consultation and opened a second consultation to invite further views on the potential regime ahead of a proposed implementation from April 2022; any responses should be provided by 1 June 2021. Background In March last year, HMRC published a consultation document asking for views on the introduction of a notification requirement in respect of uncertain tax treatments for large businesses (i.e. those businesses which are in scope of the Senior Accounting […]

The Finance Bill 2021 was published on 11 March 2021.  We set out below our comments on the key provisions that may affect oil and gas companies. Decommissioning Overview The Finance Bill includes amendments to clarify and expand the circumstances where expenditures on decommissioning plant and machinery may qualify for the special capital allowance relief for ring fence companies. The changes are aimed at expenditures incurred at a time where formal approval of an abandonment programme has not yet been […]

The Chancellor delivered Budget 2021 today.  We set out below the key announcements that apply to the oil and gas sector. Ring fence and supplementary charge to corporation tax rates Despite the rise in the main tax rate as discussed below, there was no specific announcement on any changes to the oil tax rates.  Therefore, the rates will continue to be those currently enacted being 30% for ring fence corporation tax and 10% for the supplementary charge to corporation tax. […]

The Government announced last week that the UK will now not implement the EU Mandatory reporting rules (‘DAC6’) in full.  Instead the UK rules for the implementation of DAC 6 have been amended to require reporting of only a limited subset of the DAC6 list of reportable transactions. This subset broadly equates to the requirement in the OECD model for reporting, and HMRC have announced that the newly amended rules will, in due course, be superseded by a disclosure regime […]

Implementation of uncertain tax treatments notification is delayed until April 2022 The Government announced last week that the implementation of the new requirement for large businesses to notify HMRC of uncertain tax treatments will be delayed until April 2022.  The Government stated that the delay was to allow more time to get the policy and legislation right and to allow more time for businesses to prepare. This decision has been made following the recent consultation on the new proposals when […]

Mandatory reporting rules for certain types of transactions have been introduced by the UK, as required by the EU Directive on Administrative Cooperation, commonly called DAC6.  The obligation to report will fall mainly on “intermediaries”, i.e. broadly advisers, but in certain circumstances, the obligation will fall on the businesses themselves, and companies will therefore need to make sure they are complying with any obligations that exist for them. These rules came into force on 1 July 2020 and originally had […]