Oil giant Shell revealed in October that it had so far avoided paying anything under the energy profits levy because it had claimed tax relief using an investment “loophole”.
Despite tightening the rules around the “investment allowance” at the autumn Budget, the prime minister has been urged to reveal the exact amounts that fossil fuel firms pay under the windfall tax.
The Liberal Democrats have tabled an amendment to the finance bill that would force the government to publish quarterly figures – including the amounts saved under the investment allowance.
“The sums raised from the government’s so-called windfall tax are an embarrassingly small fraction of the recent oil and gas profits,” the Lib Dems’ Treasury spokesperson Sarah Olney told The Independent.
“The news of Shell avoiding this tax is a slap in the face for struggling families and pensioners,” she said. “It’s clear the government is putting business before people.”
Ms Olney added: “The sad truth is that while people across Britain struggle to make ends meet this out of touch government is refusing to make oil and gas giants pay their fair share.”
The amendment would force ministers to produce quarterly reports outlining the amount of tax each company has avoided by offsetting profit with the investment allowance – which is aimed at encouraging further oil and gas exploration.
Although it is unlikely to pass without significant Tory support, Tessa Khan, executive director of the Uplift anti-fossil fuel group, said it was time the public knew “how much of our money is going on propping up this dying industry”.
The campaigner added: “Publishing these figures would expose the vast subsidies – billions of pounds – that the UK is forgoing due to the gaping loophole that Rishi Sunak deliberately introduced as chancellor. This is money that should be going to help older and disabled people, those with young children and others who face enormous hardship this winter.”
Shell said in October that it does not expect to pay any extra tax this year, despite adding £8.2bn in profit in the three months to September. But the company said it did expect to pay “extra tax” early next year.
BP said it will pay around £714m in the windfall tax this year, as it announced £7.1bn profits between in the three months in September.
Under pressure to boost the windfall tax and end the “loophole”, chancellor Jeremy Hunt announced at the Budget that the energy profits levy would be raised from 25 per cent to 35 per cent and extended two years until March 2028.
Mr Hunt also tightened the rules around the investment allowance, so oil and gas companies can only cut their windfall tax bill by 29 per cent of the amount invested in new extraction – down from an 80 per cent discount.
The amount collected under the windfall between May, when it into force, and the end of September was £2.8bn, according to official ONS figures.
But the Treasury said changes in the Budget – including a 45 per cent windfall tax on any “extraordinary” revenue by electricity generators – mean the levy should raise around £14bn next year.
Labour has called for the investment “loophole” to be closed, saying the government had left “billions of pounds on the table” from profits that are “windfalls” of the Russia invasion of Ukraine.
“They have failed to close a huge loophole that they created, that hands out massive tax breaks to those oil and gas giants for doing things they were going to do anyway,” said shadow chancellor Rachel Reeves.
However, some oil exploration firms have warned that they face going out of business due to the windfall tax. Brindex, which represents many of the smaller British companies that work in North Sea oil and gas exploration, said the levy posed an “existential threat”.
Jacques Thome, a spokesman for Brindex, told GB News on Tuesday: “We’re talking about what is a Treasury-inflicted complete collapse of the North Sea.”