Asked by: Clive Lewis (Labour - Norwich South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether he has plans to respond to his Department's consultation on VAT on energy-saving materials which closed in December 2015.
Answered by Mel Stride - Secretary of State for Work and Pensions
HMRC’s consultation closed on 3 February 2016.
HM Treasury are discussing the practical application of the Court of Justice of the European Union’s judgment with the European Commission.
Asked by: Clive Lewis (Labour - Norwich South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what sums the Government (a) received in tax revenues from North Sea oil production and (b) paid out in decommissioning-related tax breaks in each of the last three years for which figures are available.
Answered by Robert Jenrick
Transferable tax history is forecast to increase tax receipts from oil and gas production by £65m between tax years 2018-19 and 2023-24.
It would therefore be unnecessary to set aside additional funding to implement this policy.
Wider decommissioning tax relief is provided to companies undertaking decommissioning activities through deductions against current or future taxable profits and, in some situations, repayments of previously paid tax.
The UK oil and gas industry is expected to pay an additional £13bn of tax over the next 5 years, net of tax repayments for decommissioning tax relief.
The Government publishes OBR verified forecasts of future tax receipts for the 5 year period up to year 2023/24.
Government internal projections for TTH beyond 2023/24 show it will continue to be revenue positive for the Exchequer.
Para 5 (d) of Schedule 14 to the Finance Bill (No.3) 2017-19 determines the “uplifted decommissioning cost estimate”. This refers to the maximum possible amount of tax history that the seller can transfer to a purchaser under a transferable tax history election. It does not represent the actual tax relief that the purchaser will receive from making a claim for transferable tax history.
The amount of transferable tax history that a purchaser can claim will always be limited to the activated amount of transferable tax history. The activated amount is defined as the extent by which decommissioning costs of the transferred field exceed the tracked profits of the transferred field.
If a purchaser is able to make a claim for transferable tax history they cannot receive a larger repayment than the seller would have received for undertaking the same decommissioning work.
The current estimate of the exchequer’s liability for decommissioning costs is therefore unaffected by the introduction of transferable tax history.
Government tax revenues from North Sea Oil and Gas companies over the last three years are reproduced in the table below. More details can be found in Table 11.11 in the publication “Statistics of Government revenues from UK Oil and Gas production”.
Tax repayments are made to ring-fenced oil and gas companies if the assessment of tax due from an earlier period is revised downwards. This can be the result of many factors, including decommissioning tax relief. Estimates of total tax relief arising from decommissioning expenditure will be published by HMRC in Estimated Costs of Tax Reliefs in early 2019.
| 2015-16 | 2016-17 | 2017-18 |
Total tax revenues (£m) | -2 | -350 | 1,188 |
Asked by: Clive Lewis (Labour - Norwich South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to Part 2, paragraph 5d of Schedule 14 on Clause 36 of the Finance Bill 2018, what assessment he has made of the potential of the decommissioning costs doubling over the life-cycle of transferable tax history.
Answered by Robert Jenrick
Transferable tax history is forecast to increase tax receipts from oil and gas production by £65m between tax years 2018-19 and 2023-24.
It would therefore be unnecessary to set aside additional funding to implement this policy.
Wider decommissioning tax relief is provided to companies undertaking decommissioning activities through deductions against current or future taxable profits and, in some situations, repayments of previously paid tax.
The UK oil and gas industry is expected to pay an additional £13bn of tax over the next 5 years, net of tax repayments for decommissioning tax relief.
The Government publishes OBR verified forecasts of future tax receipts for the 5 year period up to year 2023/24.
Government internal projections for TTH beyond 2023/24 show it will continue to be revenue positive for the Exchequer.
Para 5 (d) of Schedule 14 to the Finance Bill (No.3) 2017-19 determines the “uplifted decommissioning cost estimate”. This refers to the maximum possible amount of tax history that the seller can transfer to a purchaser under a transferable tax history election. It does not represent the actual tax relief that the purchaser will receive from making a claim for transferable tax history.
The amount of transferable tax history that a purchaser can claim will always be limited to the activated amount of transferable tax history. The activated amount is defined as the extent by which decommissioning costs of the transferred field exceed the tracked profits of the transferred field.
If a purchaser is able to make a claim for transferable tax history they cannot receive a larger repayment than the seller would have received for undertaking the same decommissioning work.
The current estimate of the exchequer’s liability for decommissioning costs is therefore unaffected by the introduction of transferable tax history.
Government tax revenues from North Sea Oil and Gas companies over the last three years are reproduced in the table below. More details can be found in Table 11.11 in the publication “Statistics of Government revenues from UK Oil and Gas production”.
Tax repayments are made to ring-fenced oil and gas companies if the assessment of tax due from an earlier period is revised downwards. This can be the result of many factors, including decommissioning tax relief. Estimates of total tax relief arising from decommissioning expenditure will be published by HMRC in Estimated Costs of Tax Reliefs in early 2019.
| 2015-16 | 2016-17 | 2017-18 |
Total tax revenues (£m) | -2 | -350 | 1,188 |
Asked by: Clive Lewis (Labour - Norwich South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what estimate he has made of the costs of the transferable tax history policy in the ten years after April 2024.
Answered by Robert Jenrick
Transferable tax history is forecast to increase tax receipts from oil and gas production by £65m between tax years 2018-19 and 2023-24.
It would therefore be unnecessary to set aside additional funding to implement this policy.
Wider decommissioning tax relief is provided to companies undertaking decommissioning activities through deductions against current or future taxable profits and, in some situations, repayments of previously paid tax.
The UK oil and gas industry is expected to pay an additional £13bn of tax over the next 5 years, net of tax repayments for decommissioning tax relief.
The Government publishes OBR verified forecasts of future tax receipts for the 5 year period up to year 2023/24.
Government internal projections for TTH beyond 2023/24 show it will continue to be revenue positive for the Exchequer.
Para 5 (d) of Schedule 14 to the Finance Bill (No.3) 2017-19 determines the “uplifted decommissioning cost estimate”. This refers to the maximum possible amount of tax history that the seller can transfer to a purchaser under a transferable tax history election. It does not represent the actual tax relief that the purchaser will receive from making a claim for transferable tax history.
The amount of transferable tax history that a purchaser can claim will always be limited to the activated amount of transferable tax history. The activated amount is defined as the extent by which decommissioning costs of the transferred field exceed the tracked profits of the transferred field.
If a purchaser is able to make a claim for transferable tax history they cannot receive a larger repayment than the seller would have received for undertaking the same decommissioning work.
The current estimate of the exchequer’s liability for decommissioning costs is therefore unaffected by the introduction of transferable tax history.
Government tax revenues from North Sea Oil and Gas companies over the last three years are reproduced in the table below. More details can be found in Table 11.11 in the publication “Statistics of Government revenues from UK Oil and Gas production”.
Tax repayments are made to ring-fenced oil and gas companies if the assessment of tax due from an earlier period is revised downwards. This can be the result of many factors, including decommissioning tax relief. Estimates of total tax relief arising from decommissioning expenditure will be published by HMRC in Estimated Costs of Tax Reliefs in early 2019.
| 2015-16 | 2016-17 | 2017-18 |
Total tax revenues (£m) | -2 | -350 | 1,188 |
Asked by: Clive Lewis (Labour - Norwich South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether the Government has established a decommissioning fund to ensure funding for the transferable tax history policy.
Answered by Robert Jenrick
Transferable tax history is forecast to increase tax receipts from oil and gas production by £65m between tax years 2018-19 and 2023-24.
It would therefore be unnecessary to set aside additional funding to implement this policy.
Wider decommissioning tax relief is provided to companies undertaking decommissioning activities through deductions against current or future taxable profits and, in some situations, repayments of previously paid tax.
The UK oil and gas industry is expected to pay an additional £13bn of tax over the next 5 years, net of tax repayments for decommissioning tax relief.
The Government publishes OBR verified forecasts of future tax receipts for the 5 year period up to year 2023/24.
Government internal projections for TTH beyond 2023/24 show it will continue to be revenue positive for the Exchequer.
Para 5 (d) of Schedule 14 to the Finance Bill (No.3) 2017-19 determines the “uplifted decommissioning cost estimate”. This refers to the maximum possible amount of tax history that the seller can transfer to a purchaser under a transferable tax history election. It does not represent the actual tax relief that the purchaser will receive from making a claim for transferable tax history.
The amount of transferable tax history that a purchaser can claim will always be limited to the activated amount of transferable tax history. The activated amount is defined as the extent by which decommissioning costs of the transferred field exceed the tracked profits of the transferred field.
If a purchaser is able to make a claim for transferable tax history they cannot receive a larger repayment than the seller would have received for undertaking the same decommissioning work.
The current estimate of the exchequer’s liability for decommissioning costs is therefore unaffected by the introduction of transferable tax history.
Government tax revenues from North Sea Oil and Gas companies over the last three years are reproduced in the table below. More details can be found in Table 11.11 in the publication “Statistics of Government revenues from UK Oil and Gas production”.
Tax repayments are made to ring-fenced oil and gas companies if the assessment of tax due from an earlier period is revised downwards. This can be the result of many factors, including decommissioning tax relief. Estimates of total tax relief arising from decommissioning expenditure will be published by HMRC in Estimated Costs of Tax Reliefs in early 2019.
| 2015-16 | 2016-17 | 2017-18 |
Total tax revenues (£m) | -2 | -350 | 1,188 |
Asked by: Clive Lewis (Labour - Norwich South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what proportion of the UK’s remaining 7.5 billion barrels of discovered undeveloped oil and gas resources can be exploited if the UK is to contribute to meeting the climate change goals set out in the Paris Agreement.
Answered by Robert Jenrick
In the IPCC Special Report on Global Warming of 1.5˚C, all the scenarios reflect an ongoing role for some fossil fuel use, recognising the need to maintain a supply of energy to meet global demand.
The UK is currently a net importer of both oil and gas and our domestic supply is forecast to decline further in the future. Managing the declining production of our relatively small domestic basin, whilst reducing our overall consumption of fossil fuels is compatible with the UK’s obligations under the Paris Climate Agreement.
Asked by: Clive Lewis (Labour - Norwich South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the compatibility of Transferable Tax History and the Paris climate agreement.
Answered by Robert Jenrick
In the IPCC Special Report on Global Warming of 1.5˚C, all the scenarios reflect an ongoing role for some fossil fuel use, recognising the need to maintain a supply of energy to meet global demand.
The UK is currently a net importer of both oil and gas and our domestic supply is forecast to decline further in the future. Managing the declining production of our relatively small domestic basin, whilst reducing our overall consumption of fossil fuels is compatible with the UK’s obligations under the Paris Climate Agreement.
Asked by: Clive Lewis (Labour - Norwich South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what the net flow of revenue has been between the Treasury and North Sea oil and gas companies over the last three years.
Answered by Robert Jenrick
Government tax revenues from North Sea Oil and Gas companies over the last three years are reproduced in the table below. More details can be found in Table 11.11 in the publication “Statistics of Government revenues from UK Oil and Gas production”. Total Government revenue, including oil licence fees, is published by the Oil and Gas Authority at “Table: Government revenues from UK oil and gas production 1964/65-2017/18”
| 2015-16 | 2016-17 | 2017-18 |
Total tax revenues (£m) | -2 | -350 | 1,188 |
Licence fees (£m) | 71 | 65 | 62 |
Total Gov Revenue (£m) | 69 | -285 | 1,250 |
Link to publications: https://www.gov.uk/government/statistics/government-revenues-from-uk-oil-and-gas-production--2
https://www.ogauthority.co.uk/media/5138/tax_table_nov_2018.pdf
Asked by: Clive Lewis (Labour - Norwich South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will make an assessment of the potential merits of limiting Transferable Tax History claims to incoming companies’ investment in (a) infrastructure, (b) maintenance, (c) retraining and (d) methane reduction.
Answered by Robert Jenrick
Restricting the use of transferable tax history (TTH) in this way will make it an unattractive tool for new entrants to the basin.
TTH has been carefully designed to put new entrants in the same tax position as current licensees. Creating a two-tier system where new entrants must meet stricter criteria than existing operators to receive tax relief will discourage much needed new investment into the basin.
Asked by: Clive Lewis (Labour - Norwich South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will make an assessment of the stability and security of jobs for workers on North Sea oil rigs under Transferable Tax History.
Answered by Robert Jenrick
Transferable tax history will encourage new investment into the North Sea and prolong the productive life of the basin. This will help protect the 280,000 jobs across the UK that are supported by the industry.