Whale Rock comments on tax relief boost for North Sea producers

Whale Rock, the City-based chartered accountancy firm specialising in oil and gas companies, has commented on news that the Government has scaled back its £2 billion tax hike on North Sea oil producers by increasing tax relief on losses.

The annual rate of Ring Fence Expenditure Supplement (RFES) will increase from six per cent to 10 per cent, with effect from 1 January 2012. The announcement comes  just months after Chancellor George Osborne announced an increase in the tax paid on North Sea oil production from 20 per cent to 32 per cent.

Treasury Minister Justine Greening said the tax relief increase was designed to help ensure current allowances worked effectively, adding that it would also lay the groundwork for further discussions on field allowances.

Norwegian oil giant Statoil, which shut down projects off Britain due to the tax rise, has said it will now resume work on its Mariner field as a result of the allowance increase.

However, some commentators have criticised the relief, saying it will not do enough to help North Sea producers affected by March’s tax hike announcement.

James Ward, Director and Group Chairman of Whale Rock, said: “It’s a question of too little but at least we are seeing companies like Statoil resuming interest, which should have a knock-on impact for the smaller independents.

“At Whale Rock, we would like to see an end to the tinkering within the tax system, to enable a stable and fair fiscal regime and one that encourages the future development of the North Sea.”

For further comment, please contact Whale Rock on 0207 726 5080 or visit www.whalerock.co.uk.

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