Global Witness has made a submission to the UK Treasury's consultation on Transferable Tax History (TTH). Transferable Tax History, proposed for the next Finance Bill due in the autumn, would be an unprecedented tax break allowing the tax histories of North Sea oil and gas assets to be sold along with the assets themselves.
Independent research for Global Witness reveals that TTH could add more than £3bn to the UK’s decommissioning bill over the first ten years, with further potential costs beyond this time horizon, or should more TTH deals be struck than our modelling assume.
Global Witness believes Transferable Tax History is fiscally dangerous and inadequately justified. As a result, it should be immediately and indefinitely postponed, pending a full assessment of the true potential cost of the policy.
We therefore recommends that the Government:
- Immediately and indefinitely postpones implementation of TTH, until adequate modelling is
done to understand the full, long-term impacts.
- Prepares and publishes a detailed model of the impact of TTH on public liability for
decommissioning liabilities in different oil market scenarios.
- Prepares and publishes a cost benefit analysis – showing the impact of TTH on liabilities and
revenues – on a timescale consistent with the 44-year decommissioning projections
compiled by HMRC.
- Accompanies any future TTH policy with a detailed plan as to set aside sufficient current
revenue to cover the decommissioning liabilities.
- Review the “Maximising Economic Recovery” policy to reconcile it with both a long-term
plan to fund decommissioning costs, and the Paris climate agreement.
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