§ Sir William Clark
asked the Chancellor of the Exchequer whether he intends to make any changes to his oil tax proposals in the light of oil industry representations.
§ Sir Geoffrey Howe
I have carefully considered the oil industry's representations for a substantial reduction in oil taxation. I do not believe that this would be justified and I believe that there are adequate returns on North Sea projects at the current broad levels of taxation. I do, however, accept that the operation of my proposals, particularly as they affect some more marginal fields, could be improved by modifications. Amendments to the Finance Bill are therefore to be tabled with the following effects:
The changes at (d) and (e) will cost about £35 million in 1982–83 and £20 million—in extra interest cost from 110W deferring tax payments—in 1983–84. The cost of the APRT changes—(a), (b) and (c) above—will arise in later years and will depend on oil pries and future profitability.
- (a) To remove further APRT liability for a field five years after first liability to APRT for that field.
- (b) To repay any APRT which has not by then been set off against ordinary PRT liabilities.
- (c) To take APRT into account in computing payback for PRT, thereby extending the period in which the uplift and safeguard reliefs for PRT are available.
- (d) To spread the payment of the PRT payment on account due on 1 September 1983 in five monthly instalments between 1 September 1983 and 1 January 1984, in order to lighten the impact on company cash flow and working capital of the new accelerated PRT instalment pattern in the transitional year.
- (e) To backdate by two years the effect of clause 121 of the Finance Bill—treatment of losses and charges on income.