§ Mr. PageTo ask the Chancellor of the Exchequer whether he will make a statement about the treatment under the PRT nomination scheme of oil taken to refining.
§ Mr. LilleyParagraph 5, schedule 8 Finance (No. 2) Act 1987 if triggered by Treasury order, would impose an additional PRT charge on certain transactions. The fear has been expressed that this additional PRT charge could apply to an integrated group's transfers of its own production to refining even where these had not been undertaken in order to minimise PRT. Although concerned to ensure that transfers to refining are not used to undermine the PRT nomination scheme, the Government recognise that there are many such transfers which are not driven by an attempt to reduce tax liabilities. The Government have therefore authorised discussions between the Inland Revenue and the industry to see whether changes are needed to the scheme.
The Government appreciate that, until these conditions are complete, there will inevitably be an element of uncertainty attaching to the tax consequences of current company decisions. We therefore propose, in the event of the Finance (No. 2) Act provisions being triggered while consultations are still continuing, to use the power in paragraph 5 to make transitional arrangements to protect current appropriations and intergroup transfers to refining. These would ensure that the additional PRT charge would not apply to any oil a group takes to refining before the date of the Treasury order itself.