PKF - New tax relief unlikely to boost North Sea gas investment

25 July 2012: A new tax relief being introduced by the Treasury to support investment in North Sea gas is unlikely to encourage additional exploration in the area, according to PKF Accountants & business advisers.

The Government earlier announced an allowance for large shallow-water gas fields under which the first ?500m of income from qualifying fields will be protected from the 32 per cent Supplementary Charge (SC) tax rate.

Jeff Harris, co-head of PKF?s Natural Resources team, said: ?Whilst we welcome any effort on the part of the Treasury to stimulate continued exploration and development of energy in the North Sea - particularly when independent forecasters have announced that they expect to see a continuing significant reduction in production of the next few years - the measures announced today are very much at the margins. They are unlikely to play any significant part in stimulating the significant spend necessary to discover and bring new fields into production.

?Indeed, the Treasury states that this measure will only cost ?20 million a year, so it must believe that very few fields will qualify and that those that do will generate protected revenue over a significantly long period. As a result, this isn?t going to do much to assist with development expenditure in the short term.?

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For further information, please contact:
Andy Konieczko, 020 7065 0537, andrew.konieczko@uk.pkf.com
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Notes to Editors:
PKF (UK) LLP is a leading firm of accountants and business advisers with more than 1,400 partners and staff operating in over 20 offices in the UK mainland firm, incorporating a wholly-owned financial planning company and associated offshore practices. The firm specialises in advising growing and entrepreneurial/owner-managed businesses, AIM and fully listed companies, and also has extensive experience in the public and not-for-profit sectors. Principal services include assurance and advisory; taxation; consultancy; corporate recovery and insolvency; corporate finance and forensic. The firm has particular expertise in advising sectors such as hotels and leisure; mining and resource; public sector; real estate and construction; professional practices; not-for-profit; and medical. The firm?s web site is www.pkf.co.uk

Source: http://www.pkf.co.uk/pkf/news/press_release/new_tax_relief_unlikely_to_boost_north_sea_gas_investment

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