Wood Review "must be swiftly implemented following referendum"News // September 23, 2014
"Last week’s news gives us certainty over some aspects, with Europe and currency being now put on the back burner," says Graham Alexander, head of oil and gas and partner at Johnston Carmichael.
"However, changes ahead are inevitable and not just for Scotland. Further devolution of powers and taxes will happen and the announcement of Lord Smith of Kelvin’s appointment to deliver draft legislation by January 2015 will mean that we don’t have to wait for long.
"It’s worth reminding ourselves that the Scottish Income Tax provisions are already on the statute books (rate to be announced) and there is already in place the legislative framework to enable further devolved powers to be implemented with relative ease.
"We still expect the Scottish Income Tax rate to come into effect in April 2016 and all businesses will need to start to consider what this means for them. Some commentators consider the 50% rate of income tax likely to return in Scotland - this may be ill advised as it’s now the time to have a level playing field within the UK and to give businesses and employees certainty.
"Other changes resulting from the Scotland Act 2012 are still expected to come into effect on 1 April 2015, with tax raising powers for Stamp Duty Land tax and Landfill Tax being devolved to Scotland in the form of Land and Buildings Transaction Tax and Scottish Landfill Tax. The rates for these new taxes are expected to be announced on 9 October 2014 when the draft budget is introduced to the Scottish Parliament. Anyone considering property transactions will be eagerly awaiting the rates.
"Now that the vote is known, we look forward to both the Scottish and UK governments working closely together to maximise the recovery of the UK’s offshore oil and gas resource.
"The oil and gas industry is a fundamental part of the Scottish and UK economy, a fact only highlighted through the referendum campaign. It is therefore important that the governments work together to swiftly implement the recommendations of the Wood Review to minimise uncertainty and create an environment for maximising the recovery of oil and gas in the North Sea, for the long term benefit of the UK and communities in which these businesses operate.
"The industry must also continue to focus on cross-sector efforts to bring escalating costs under control to protect and enhance the long term prospects of the industry and thereby the Scottish and UK economies as a whole.
"Together with maximising economic recovery from the UKCS, both the Scottish and UK Governments also need to continue to work to strengthen the oil and gas industry supply chain across Scotland and the UK, particularly as part of the focus on enhanced cost control."