(9 years, 4 months ago)
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The Exchequer Secretary to the Treasury (Damian Hinds)
At Budget 2013, the Government announced they would begin signing decommissioning relief deeds. These deeds represent a new contractual approach to provide oil and gas companies with certainty on the level of tax relief they will receive on future decommissioning costs.
Since October 2013, the Government have entered into 72 decommissioning relief deeds. Oil & Gas UK estimates that these deeds have so far unlocked more than £3.5 billion of capital, which can now be invested elsewhere.
The Government committed to report to Parliament every year on progress with the deeds. The report for financial year 2014-15 is provided below.
1. The number of decommissioning relief agreements entered into: the Government entered into 16 decommissioning relief agreements in 2014-15.
2. The total number of decommissioning relief agreements in force at the end of that year: 66 decommissioning relief agreements were in force at the end of the year.
3. The number of payments made under any decommissioning relief agreements during that year, and the amount of each payment: no payments were made under any decommissioning relief agreements in 2014-15.
4. The total number of payments that have been made under any decommissioning relief agreements as at the end of that year, and the total amount of those payments: no payments had been made under any decommissioning relief agreement as at the end of the 2014-15 financial year.
5. An estimate of the maximum amount liable to be paid under any decommissioning relief agreements: the Government have not made any changes to the tax regime that would generate a liability to be paid under any decommissioning relief agreements. The Government will recognise a provision of £230 million in respect of decommissioning expenditure incurred as a result of a company defaulting on their decommissioning obligations. The date of recognition is dependent on the date of default, however our current planning assumptions assume the amount will be included in HM Treasury’s 2015-16 accounts.
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