How BP avoids paying any tax in the UK

BP’s defenders often claim that it pays large amounts of tax in the UK, so we all benefit from its business activities. The reality couldn’t be further from the truth. In fact, BP’s tax avoidance is scandalous.

The amount of money BP spends on arts sponsorship is dwarfed by the amount the company receives in subsidies and tax breaks from UK taxpayers. In 2015 BP paid no tax in the UK – instead, it received over £210 million in credits from the public purse. This is more than 100 times what the company spends on sponsoring the arts each year. Plus, of course, sponsorship is tax deductible.

And this wasn’t a one-off. BP made £5.6 billion in profit in 2017 – yet still received tax credits worth £134 million, again making it a net receiver of tax money in the UK, rather than contributing to the cost of running the country where its shares are listed.

This is part of a much wider scandal. The scale of fossil fuel subsidies and tax breaks in the UK means that over the next five years the government is likely to give oil companies around £5bn more than it receives from them in tax revenues. The UK has the biggest fossil fuel subsidies in the EU, and they have increased over the past decade, thanks in part to BP’s lobbying and close links to the government.

A lot of this is down to government support for the ageing North Sea oil industry, which became a net drain on the UK economy for the first time in 2016. Oil companies are being allowed to claim tax rebates for decommissioning old oil rigs and infrastructure – despite having made vast profits from their operation. Rather than the polluter paying, the costs have been deftly shifted onto UK taxpayers.

If we stopped subsidizing fossil fuels we could channel that money into properly funding the arts and investing in the zero carbon transition.

We need to phase out oil and gas extraction through a just transition for workers and communities. The ‘Sea Change’ report, created by Friends of the Earth Scotland, Oil Change International and Platform, sets out the case for this in the UK.

It highlights the contradiction of saying that we are serious about climate change and yet aiming to get every last drop of oil and gas out of the North Sea. It also looks at the huge potential for alternative jobs in renewable energy and energy efficiency, and the measures the UK and Scottish government need to take to make this transition real and fair.