The oil industry’s trust in Mr Osborne was severely dented by his surprise raid on its profits by last year’s 12% hike in supplementary charge, coupled with a cap on relief for decommissioning. However, in this year’s Budget, the Chancellor went some way to redeem himself by agreeing to try to bind future governments to a particular rate of tax relief for decommissioning platforms and infrastructure.
The need to account for relevant decommissioning costs arises when plant is first installed but tax relief is available only when decommissioning actually takes place many years later. In the meantime commercial requirements may well arise for a company to provide security to counterparties for its share of such costs. Until now provision has been...
