Exclusive:Revealed: Oil giant behind Rosebank has secured £400m tax break from Treasury
The Norwegian state-owned oil giant behind controversial Rosebank plans has secured £400 million from a little-known tax break from the Treasury, new analysis has revealed.
Calls have been made for the UK government to examine whether tax reliefs introduced more than a decade ago “are still fit for purpose” amid demand for a new strategy to prioritise “fairness to bill payers” and a blueprint that “supports the government’s green transition plans”.
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Hide AdThe demands come after analysis by campaign group Uplift and TaxWatch, exclusively shared with the Scotsman, revealed Norwegian oil giant Equinor used the Ringfence Expenditure Supplement (RFES) to secure £400m in tax relief in just two years - 2021 and 2022.
The policy allows companies to arbitrarily increase the value of their losses by 10 per cent a year, which then reduces the tax they pay in future.
RFES was extended in 2011 by then chancellor George Osbourne after intense industry lobbying against a tax hike on oil and gas profits. This extension was projected to cost the Treasury around £50m a year.
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Hide AdThe policy was originally set up to help smaller oil companies explore marginal fields in the North Sea. But now, it is costing many times what it was expected to, while HMRC has no current estimate of the cost to public finances to be able to evaluate its effectiveness.
Equinor, which is the UK’s biggest gas supplier, made global pre-tax profits of £62 billion in 2022, with an estimated £1bn of that made just from its UK businesses. However, that same year, Equinor paid just £6m in UK taxes, according to its accounts, and it paid no tax on its UK oil and gas activities.
Equinor announced on Thursday it brought in an adjusted operating income of almost $7bn [£5.4bn] and $2bn [£1.5bn] after tax in the third quarter of 2024.
READ MORE: How the Scottish Parliament is lobbied: Oil giants and whisky chiefs' 'speed dating' access to MSPs
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Hide AdThe Norwegian giant is also set to receive billions in UK tax breaks from the development of the controversial Rosebank oil field.
The revelation comes as the oil and gas sector continues to warn against Labour’s plans to continue the energy profits levy, which is due to increase next month and remain in place until 2030.
Tessa Khan, executive director of Uplift said: “This measure was handed to the industry after companies complained about previous tax increases, and they’ve been hugely benefiting from it ever since.
“To see them now issuing warnings about job losses from the latest windfall tax is rich coming from an industry that has made record profits in recent years.
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Hide Ad“As the North Sea declines and transitions away from oil and gas, there is an urgent need to reform the UK’s oil and gas tax regime so that it both delivers fairness to bill payers and supports the government’s green transition plans, not the bloated bank balances of overseas oil companies.”
Claire Aston, director of TaxWatch said: “The Treasury needs to review the oil and gas fiscal regime and evaluate whether reliefs introduced a decade or more ago are still fit for purpose.
“The fact that HMRC aren’t collecting data to make this evaluation properly is deeply concerning, risking the taxpayer subsidising loss-making projects.”
An Equinor spokesperson said: “Equinor have invested heavily in the UK for several years. We are currently investing more than we have income, which reflects our tax position.”
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