Budget 2017: North Sea oil and gas tax relief will be reviewed by a panel of experts
As the UK faces declining oil and gas production in the North Sea, the chancellor has unveiled new measures to review tax relief and maximise the exploitation of remaining reserves.
In his Budget, chancellor Philip Hammond said a new advisory panel of industry experts will be established and a formal discussion paper will be published on how tax can assist sales of North Sea oil and gas fields.
"While not a complete overhaul, it is hoped these measures will alleviate the current bottleneck around the transfer of mature fields in the North Sea to late life specialists," said Chris Bates, a partner of global law firm Norton Rose Fulbright.
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However, Stewart Hosie, MP for the Scottish National Party, said the announcement shows a failure to act and demonstrates "an alarming lack of urgency".
Recent deals in the North Sea highlight the opportunities there, but more transactions could be achieved if the tax issue is resolved, said Deirdre Michie, chief executive of Oil and Gas UK.
The industry is slowly emerging from a challenging period, and it's crucial that the North Sea attracts investment now to sustain production and stimulate new activity, she said.
Alan McCrae, PwC’s UK head of energy tax agreed, saying: "If we are to maximise the lifespan of the basin, it’s vital that these barriers are unblocked, enabling assets to move to companies that are likely to invest in the medium to longer term – before they find alternative uses for their capital elsewhere."
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