Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment the Government has made of the effect of Transferable Tax History on the incentives for buying companies to increase oil and gas production and generate further revenues.

The Government, with technical advice from the Oil and Gas Authority (OGA) and representations from the industry via the trade body Oil and Gas UK, assesses that there will be instances when companies hoping to purchase mature fields will be in a position to extract more value from the field through investment than their current owner.

However, there is a barrier to these deals taking place due to the uncertainty around whether the buyer will obtain equivalent decommissioning tax relief.

Transferable Tax History (TTH) overcomes this uncertainty, enabling companies to complete asset deals on mature fields and allowing new investment to take place. Without TTH, transactions for mature assets are expected to be less common and the increased revenue from production is not realised.

More details can be found in the published policy paper, “Oil and gas taxation: transferable tax history and retention of decommissioning expenditure”.