Legal action threatened over week-long consultation on large new oil and gas subsidy

05 Jul 2022

Planning and Environment

Legal action has been threatened over one of the Government’s flagship measures to address the cost of living crisis – the “windfall tax” – as it may be undermined by loopholes and an unlawful consultation process. The Energy (Oil and Gas) Profits Levy Bill (“the Bill“) imposes an additional 25% tax on oil and gas profits, partially to fund a £15 billion support package to help UK households struggling with soaring energy bills. Tied to this levy, however, is a new circa £1.9 billion a year tax relief for oil and gas companies, which is justified as an incentive to the industry to invest in UK oil and gas production. This appears to be a new subsidy for the fossil fuel industry and a significant loophole in the windfall tax bill.

Uplift UK, a climate change NGO which supports a just transition and a fossil fuel-free UK, has sent pre-action correspondence to HMRC challenging the lawfulness of the consultation conducted in relation to the Bill. HMRC published the draft legislation online on 21 June 2022 and, at the same time, opened a consultation which closed at 11:45pm on 28 June 2022, i.e. 7 days later. Uplift contends this breaches established principles for fair and lawful consultation, in particular that adequate time must be given for consideration and response, and breaches the Aarhus Convention obligations requiring effective public participation.

Estelle Dehon QC and Ruchi Parekh are instructed by Rowan Smith of Leigh Day, on behalf of Uplift UK. Further coverage of the issue is in the Financial Times.