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Autumn Budget 2017: Oil and Gas taxation – introduction of transferrable tax history

AB17: Oil and Gas taxation

The Chancellor has announced that companies will be able to transfer tax history on the disposal of oil fields.


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The Chancellor has announced that companies will be able to transfer tax history on the disposal of oil fields.

Tax relief for decommissioning is restricted to the amount of tax a company has paid in periods to 2002. This creates a problem for new investors acquiring late life assets where the costs of decommissioning may be far in excess than the tax they will pay on the profits generated by the investment. This inability to access tax relief for decommissioning has been seen as a barrier to new entrants to the North Sea.

The new rules will allow the vendor to transfer their tax history to the purchaser of an oil field as follows:

  • The quantum of transferrable tax history (TTH) that will transfer will be decided between the buyer and seller, subject to certain safeguards; 
  • The acquiring company will be required to track the profits of the field and the ability to access the TTH will arise on the cessation of production in circumstances where the purchaser has incurred more decommissioning costs than its post-acquisition profit;
  • TTHs will be able to transfer with the field multiple times in subsequent transactions; and
  • A TTH will be allowed within a group where it is part of pre-transaction restructuring.

Draft legislation will be published for technical consultation in Spring 2018 and it will be effective from 1 November 2018.

A separate consultation will consider allowing relief for Petroleum Revenue Tax purposes where the decommissioning liability is retained by a previous licence holder.

For more details, please contact:

Claire Angell

T : +44 (0)20 7694 3327

E :

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