The head of a North Sea industry body has urged the UK Treasury to save itself tens of millions of pounds by letting oilfield owners transfer tax histories.
Under the current system, the history of tax paid remains with the original owner even if the asset changes hands.
But Oil and Gas UK (OGUK) wants sellers to be allowed to transfer their tax histories to buyers upon acquisition.
OGUK said the measure could prolong the life of mature fields and save the Treasury an average of £10million per asset in deferred tax relief.
The organisation’s analysis of 23 UK asset transfers since 2011 reveals that deals have extended field life by almost five years on average.
Some fields have gone on producing for up to an extra 14 years.
OGUK chief executive Deirdre Michie said: “Enabling tax history to be transferred between seller and buyer will ensure we encourage investment into late life but still highly productive assets and so help to extend the life of the basin.
“Transferable tax history would boost the number of mature field deals we are seeing in the North Sea. This, in turn, would help bring fresh investment into the basin, generate new production and provide extra tax revenues for Treasury.
“Mature assets are attracting interest from investors who see the competitive opportunity that the UKCS continues to offer. However, the current tax position is proving to be a blocker to potential deals and that is why it is important that HMT acts to facilitate and support further deals. With decommissioning activity forecast on 214 fields on the UK Continental Shelf to 2025, there is no time to waste.”
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