The government has now released its consultation document on Decommissioning relief deeds – its proposal to address problems caused by uncertainty within the oil industry about the availability of future tax relief for decommissioning costs. There remains further work to be done to reconcile the dual aims of achieving certainty and protecting Treasury coffers.
The government and industry have extensively discussed ways of dealing with the uncertainty over future tax relief for decommissioning costs which has a detrimental impact on North Sea investment. The proposed solution is a ‘deed of assurance’ under which the government would make a contractual ‘top-up’ payment to deed holders to the extent that relief available upon decommissioning was less than that currently anticipated (see the comment ‘Oil tax: fixing future relief’ (Michael Thompson) Tax Journal dated 4 May 2012).
However ...
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