British Gas plc has filed suit against U.K. Department of Trade & Industry (DTI) in a bid to claim back a total 1 billion ($1.5 billion) of taxes paid under the Gas Levy Act of 1981.
British Gas wants to claim back taxes to which it believes it is not liable on 24 contracts affecting North Sea fields Leman East and West, Indefatigable East and West, Hewett and North Hewett, Viking, U.K. Frigg, Brent, Forties, and West Sole.
DTI's immediate response was to issue writs "to protect the taxpayer" against the license holders of these fields.
Field operators involved are Amoco U.K. Petroleum Ltd., Shell U.K. Ltd. and Esso Exploration & Production U.K. Ltd., Phillips Petroleum Co. U.K. Ltd., Conoco (U.K.) Ltd., Total Oil Marine plc, and BP Exploration Operating Co. Ltd.
DTI said, "Should it be proved that British Gas is not liable, somebody will have to pay the levy. If not British Gas, then it must be the producers."
British Gas said this suit is not related to an earlier court action over take-or-pay contracts (OGJ, Dec. 11, 1995, p. 30)., adding, "This is a technical tax issue that the board wants to challenge."
DTI said the gas levy act was introduced to tax gas exempted from the Petroleum Revenue Tax, passed in 1975: "DTI does not believe British Gas' interpretation of the law is correct. However, it cannot ignore the risk, however small, that British Gas may prove to be right."
Copyright 1996 Oil & Gas Journal. All Rights Reserved.
