The government and industry have extensively discussed ways of dealing with the uncertainty over future tax relief for decommissioning costs which has a detrimental impact on North Sea investment. The proposed solution is a ‘deed of assurance’ under which the government would make a contractual ‘top-up’ payment to deed holders to the extent that relief available upon decommissioning was less than that currently anticipated (see the comment ‘Oil tax: fixing future relief’ (Michael Thompson) Tax Journal dated 4 May 2012).
However closer examination of the issues in the condoc shows that the solution is not as simple as it might first have appeared.
The condoc distinguishes between a ‘non-default scenario’ where each co-venturer picks up its own share of decommissioning costs as expected; and a ‘default scenario’ where a party fails to meet its share...
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The government and industry have extensively discussed ways of dealing with the uncertainty over future tax relief for decommissioning costs which has a detrimental impact on North Sea investment. The proposed solution is a ‘deed of assurance’ under which the government would make a contractual ‘top-up’ payment to deed holders to the extent that relief available upon decommissioning was less than that currently anticipated (see the comment ‘Oil tax: fixing future relief’ (Michael Thompson) Tax Journal dated 4 May 2012).
However closer examination of the issues in the condoc shows that the solution is not as simple as it might first have appeared.
The condoc distinguishes between a ‘non-default scenario’ where each co-venturer picks up its own share of decommissioning costs as expected; and a ‘default scenario’ where a party fails to meet its share...
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If you do not subscribe but are a registered user, please enter your details in the following boxes: