DAILY TELEGRAPH (UK): Oil Tax: Revenue takes a dip in North Sea: “This will allow HM Treasury to collect £1.1 billion extra in tax before April 5, 2006 as most large oil companies, such as Shell and BP, have December 31 year ends.” (ShellNews.net) 17 March 05

(Filed: 17/03/2005)

The Chancellor will boost his tax take from North Sea oil companies in the next tax year by £1.1 billion by making them pay corporation tax earlier. 

Until now oil companies have paid tax at the same time as other businesses: in four equal instalments, two during the company's accounting period and two afterwards.

However, from June, the fourth instalment will be abolished for oil companies. As a result they will have to pay corporation tax in three equal instalments, the last 14 days after their year end.

This will allow HM Treasury to collect £1.1 billion extra in tax before April 5, 2006 as most large oil companies, such as Shell and BP, have December 31 year ends.

The UK Offshore Operators Association said the accelerated payments would lead to higher finance costs of around £25m a year for the industry.

The Chancellor said the move was designed to ''align the timing of oil companies' corporation tax payments more closely with petroleum revenue tax''.

Large oil groups pay petroleum revenue tax (PRT) every month on profits from fields that received development consent before 1993.

A Government spokesman said these monthly payments ''allowed taxes to flow to the exchequer more efficiently'', adding that ''as with PRT'' the corporation tax change would mean oil companies held on to profits for less time before paying tax on them.

However, Bill Dowdell, tax partner with the accountancy firm Deloitte, said yesterday's change appeared to have ''absolutely nothing to do with PRT". ''The Chancellor might as well have said 'I have decided to make the oil companies pay their corporation tax earlier','' he said.

http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2005/03/17/supp2617.xml 

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