For a number of years the UK government has been keen to get North Sea field interests into the hands of parties who will maximise the economic recovery from those assets.
One of the stumbling blocks to such assets transferring is that the new owners may not be able to get effective tax relief for decommissioning costs due to having paid insufficient amounts of corporation tax and supplementary charge (SCT) by the time the decommissioning of those assets takes place. To overcome this several deals have been structured around the sellers retaining some or all of the decommissioning obligations. However most sellers would prefer a clean break when selling out of a field and for fields that are in the petroleum revenue tax (PRT) regime such deals are complicated as the rules work differently for PRT and corporation tax/SCT.
The government appointed an expert panel...
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