The need to account for relevant decommissioning costs arises when plant is first installed but tax relief is available only when decommissioning actually takes place many years later. In the meantime commercial requirements may well arise for a company to provide security to counterparties for its share of such costs. Until now provision has been required for the gross liability without any deduction for tax relief because the future availability and rate of relief remain uncertain.
This not only diverts funds away from reinvestment but also hampers transfers of late-life fields to companies more inclined to invest in their development because of the need for the purchaser to provide security to protect previous owners who remain...
