An additional P & L hit? As set out in our news brief in November 2019, the IASB issued an exposure draft (ED) last summer which may have a significant impact on the level of deferred tax accounted for on decommissioning assets and liabilities for certain companies. The IASB interpretations committee recently met to discuss the feedback on this ED and they have recommended that the proposal is taken forward, but with one very important and for some unwelcome change. […]

A recent tax case has considered whether an oil and gas royalty interest held by a non-UK resident gave rise to ring-fence income and whether the relevant treaty allowed HMRC to tax the income. Whilst the case concerned the treatment of royalty receipts, the findings potentially have wider application. The Case Royal Bank of Canada (the Bank) had lent money to a Canadian oil company operating in the North Sea.  The Canadian company transferred its interest in the Buchan oil […]

The supplementary charge calculation requires the relevant financing items to be excluded from the ring-fence CT (RFCT) profits. The question of how this relatively simple concept operates where losses are being utilised has been in dispute since the levy was introduced in 2002. Industry has believed that the so-called “shadow” method, where RFCT losses adjusted for any financing elements could be carried forward and set against SC profits as they arose, was valid, following an agreement with HMRC in 2007. […]

Readers may recall previous newsletters (the last one being 4 February 2020) discussing HMRC’s view of the application of the anti-avoidance rules in Part 14 CTA 2010 which can deny the use of losses where there has been a change in a company’s ownership and a major change in the nature or conduct of a trade (the so-called MCINOCOT rules), or prior to the change of ownership the trade had become small or negligible. We are pleased to note that […]

Covid-19 – the currently announced tax and fiscal changes We thought it would be helpful to summarise the recently announced Government tax measures of most relevance to the UK upstream oil industry.  In addition, we highlight some tax issues that we think businesses should be considering in light of the much-changed business environment. PAYE, Corporation Tax and other taxes – Time to Pay scheme The Government signalled that businesses that are suffering financial hardship due to Covid-19 may be eligible […]

The Finance Bill was published last week alongside a number of new consultations. Finance Bill Non ring-fence corporation tax rate The Finance Bill included confirmation that the non ring-fence rate of corporation tax for the year to 31 March 2021 is to be 19 per cent.  The Bill also repeals the provisions in an earlier Finance Act that was to reduce the rate to 17 per cent and has included a provision that sets the non-ring fence rate of corporation […]

During these difficult times, we hope that all of our clients, contacts and colleagues are keeping well. All of our staff are now working from home on a regular basis. This is something we have been doing on a lesser scale for a number of years and we are confident that, for now, we are able to continue to provide the same level of service as normal. Most contact is by way of email but if you want to speak […]

The Chancellor delivered Budget 2020 today. The Budget contained no significant changes to direct North Sea taxation and confirmed that RF rates would remain unchanged.  There was no announcement in respect of the transformational sector deal that had been included in the Conservative Manifesto. Announcements that may be of interest include: Confirmation that the main rate of corporation tax is to remain at 19 per cent, rather than reduced to 17% from 1 April 2020 as previously enacted. This is […]

The anti-loss buying rules, where applied, deny companies under new ownership the benefit of carried forward unused tax losses in place at the date of change of ownership. They apply where there has been a major change in the nature or conduct of the (company’s) trade, or where, prior to the change in ownership, the scale of the activities in the trade has become small or negligible without any significant revival. Companies undertaking oil and gas exploration, appraisal and development […]

The December year-end returns are due to be filed soon and so we thought it would be helpful to send a reminder of some of the new challenges that face companies when preparing and filing their corporation tax returns.  The complexities of tax compliance have multiplied in recent years and CW Energy remains committed to ensuring that compliance is achieved efficiently and timeously and that we optimise the tax attributes of each client. The purpose of this briefing is to […]