Shell received net rebates of over $121 million (£92m) from the UK government last year, the largest total from any country in which it operates.
In total, Shell received rebates of more than $131m (£100m) from HM Revenue and Customs, according to its latest Payments to Governments report, released Tuesday.
This was offset by fee payments to regulators, including more than $10.5m (£8m) to the Oil and Gas Authority (now the North Sea Transition Authority), and over $120,000 (£91,000) to the Crown Estate Scotland.
This stands in stark contrast with nearby Norway, where the London-headquartered supermajor paid its largest contribution of more than $4.5 billion last year. The bulk of this related to around $3.9bn in production entitlements – money owed to state-backed companies for their share of oil and gas sales – as well as taxes and fees.
Indeed, the UK was one of only three countries in which Shell received net rebates, alongside Germany ($3.9m) and India ($18m).
More than $57m (£43m) was given in tax rebates related to the decommissioning of the Brent and Fulmar fields in the UK, Shell confirmed to Energy Voice.
Its local entity, Shell U.K. Limited, also received corporation tax rebates of $74.5m (£57m).
The company has previously stated that tax relief received on decommissioning work “is not a subsidy or a new cost to the taxpayer,” but a refund on tax already paid in previous years.
UK legislation allows operators to claim relief against their huge decommissioning costs based on previously paid tax from the fields, the latter amounting to some £375bn net since 1970.
In its most recent annual report, released by the National Audit Office (NAO), HMRC said it expects to repay a total of £9.5bn in tax provisions for all North Sea decommissioning up to 2068.
Globally, Shell paid $58.7 billion to governments in 2021, including $6 billion in corporate income taxes and $6.6 billion in government royalties, it said. It also collected $46.1 billion in excise duties, sales taxes and levies on fuel and other products on behalf of governments.
Windfall tax
The report comes in the wake of bumper results for oil and gas producers. Shell saw pre-tax profits rise to around £22 billion last year – reversing pandemic-related losses of about £20bn the year before.
Chief executive Ben van Beurden described the company’s financial performance as “very strong”, and hailed it as a “momentous year”.
Yet rocketing oil and gas prices have also resulted in a domestic cost-of-living crisis, leading to calls for a windfall tax targeted at energy companies – though these have so far been resisted by the UK government.
Tessa Khan, founder and director of campaign group Uplift said: “Shell’s failure to pay any net tax in the UK in the same year it made near record profits is a scandal. There is virtually no country in the world that gives a better tax deal to oil and gas companies than the UK, and yet Rishi Sunak claims that there’s nothing more he can do to help desperate families struggling to pay their energy bills.
“This government is completely focused on facilitating oil and gas industry profits even though it does nothing to make energy for households in the UK more affordable, let alone helping us to deal with the climate crisis which these companies are also driving.”
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