§ Mr. Viggers
asked the Chancellor of the Exchequer when the consultative document on petroleum revenue tax expenditure reliefs, pipeline tariff and other non-oil receipts referred to in his Budget Statement is to be published; and if he will make a statement.
§ Mr. Wakeham
The document is being published by the Inland Revenue today, and I have arranged for copies to be placed in the Library.
The document discusses the treatment for purposes of the petroleum revenue tax of circumstances in which oil and gas-related assets are used otherwise than in the field for which they were first acquired.
A number of deficiencies in the current legislation are identified. On the one hand, relief for expenditure on such assets—including, for example, pipelines and related facilities—may, under existing law, be more restrictive than seems desirable in the interests of the efficient development of North Sea resources. On the other hand, most receipts arising from the exploitation of such assets are not currently charged to tax. It has been concluded that early action is needed to rationalise both the expenditure relief system and the treatment of incidental receipts, and the Chancellor announced in his Budget Statement his intention to legislate next year—that is, in the 1983 Finance Bill.
The document gives a firm indication of the main outlines of the approach which it is intended to adopt. This is to secure that expenditure on field assets will be allowed for PRT in full at the outset, whether or not their use may be shared or subsequently changed, and to bring into charge to PRT all incidental receipts attributable to such assets as and when received, including hire receipts, payments under a tariff or throughput agreement, or sales proceeds. Within this broad approach, the document identifies and discusses various detailed aspects, including a number of specific issues which need to be resolved. These include the treatment of transactions not at arm's length and of certain more mobile assets, and transitional or other special provisions which may be required in charging future receipts under existing agreements—particularly where expenditure relief has already been restricted—or receipts in respect of certain assets not currently within the scope of PRT—in particular, pipelines and related facilities associated with certain gas fields.
In order to avoid unacceptable uncertainty on issues which are important to the industry's forward planning, 146W and to prevent serious forestalling which could otherwise occur, it is proposed that legislation on these proposals, for the purpose both of relieving expenditure and charging receipts, should be introduced in next year's Finance Bill to have effect from today's date.
The consultative document invites representations, in particular, on the specific issues identified as requiring resolution. These should be sent to the Inland Revenue by the end of September this year.
An Inland Revenue press release issued today gives further details, including the price and availability of the document.