BP: Gulf of Mexico

Treasury written question – answered on 6th September 2010.

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Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

To ask the Chancellor of the Exchequer if he will assess the merits of seeking an exemption from tax rules to ensure that BP is not entitled to tax deductions in respect of any costs associated with the Gulf of Mexico oil spill.

Photo of David Gauke David Gauke The Exchequer Secretary

The corporation tax rules already limit deductions for costs incurred on overseas operations. In general costs may only be deducted in computing UK profits where those costs relate to a business carried on by a UK tax resident company or branch. No deduction is allowed for fines, penalties and damages incurred in respect of infractions of the law. Specific rules also ensure that tax revenues from UK oil and gas production cannot be reduced by expenses incurred in other activities.

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