§ The Earl of LAUDERDALEasked Her Majesty's Government:
Whether consortia or companies awarded "nominated" blocks in the Seventh Round of United Kingdom continental shelf exploration licences will be free to offset the required premiums against their tax liability.
§ The MINISTER of STATE, TREASURY (Lord Cockfield)Under the Seventh Round licensing arrangements announced by the Secretary of State for Energy on 1st May, any blocks awarded in the defined area for company ' self- 1583WA nomination ' will be subject to an initial payment of £5 million per block on grant of licence. The tax treatment of these payments will be determined by the precise terms of the licence agreements ultimately made between the licencees and the Secretary of State, but I would expect them to attract the same tax treatment as the initial payments due under earlier licensing rounds.
For petroleum revenue tax, the payments would be deductible either against income from producing fields in the licensed area, or if no such field were discovered, against income from other field interests owned by the licensees. For corporation tax, the payments would beeligible for mines and oil wells allowance: the expenditure would either be written down by reference to oil production from the licensed area, or—if exploration proved abortive—be allowable as a lump sum when exploration was abandoned. In either case, the expenditure would be allowed against profits of the North Sea ' ring-fence' trade.