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Bear in mind that the dcu is a depreciating asset in that it expires worthless in 2026.Therefore the capital value of a dcu held in a non Isa account depreciates to zero value and therefore represents a total loss of investment . In my case I hold dcu’s booked in Isas and in trading accounts as the investment managers are as confused as we all are.
All receipts ending up in an Isa will be non reportable however you define it and ofcourse non taxable.
As to receipts ending up in a trading account I shall regard them as a return of the capital that will reduce to zero in 2026 which I shall neither report or regard as taxable.
Let hmrc challenge that if they think it worthwhile.
In my opinion there is an elephant in the room that has not been noted.
Namely the attitude of the govt.
It must surely be concerned at the way the whole sale process has been managed and the
Slippage in the time line for getting the mine into production.
It is depriving the country of tax revenue and employment and surely there will come a time
when their patience will be exhausted.
At the current SP nationalization might well be regarded as in the national interest
and necessary.
Hank
My understanding of the situation is as follows
The prospective payments on the dcu’s from prax are based on the net revenues earned by hur.
An important aspect of this, is whether hur/prax can use its carried forward losses against its future tax liabilities.
Use of these cf losses will require hur/prax to acquire further oil production assets which appears to be Prax’s intention.
To your question…..the credit facilities granted to Prax give them finance to make such acquisitions and therefore will benefit holders of dcu’s to the extent that such acquisitions will facilitate the use of the tax credits.
I do have concerns however
1) I am not expert enough to know if the losses carried forward have a time limit for tax credits
2) The dcu’s have an expiry date in 2026 so any acquisitions would need to have an earnings impact prior to their expiry.
3) I believe that Prax will have a lot of room for shall be say “creative accounting” in calculating future hur revenue.
I would be very surprised if the dcu’s deliver the maximum mentioned in the take over dox.
Dive centre
Thanks for the info.
My only doubt is whether the acquisition of hur qualifies the losses into the prax group.
In any event I think that it is academic as long as prax use hur to make any further production aquisitions.
I suspect that you are entirely correct in respect of the returns to be expected from the dcu’s.I am concerned as to what accounting treatment prax will use to calculate the future hur profits.
However on the plus side,Crystal Amber appeared to be satisfied.
I would like to see from CA’s next holdings report how many dcu’s they are holding.
Kever I believe that the tax benefits are actually better described as accumulated hur tax losses.As such their future utilization depends on Hur creating taxable profits through acquiring additional profitable producing assets.The current well is relevant insofar as it is a revenue producing asset albeit of declining productivity. Should the current well fail completely I believe that Prax would need to swiftly inject other producing assets , as if Hur was not a producer it’s tax loss status might be compromised.
The Lancaster field is also not crucial in that Prax could use Hur to acquire additional producing assets outside of the Lancaster field.I believe that Prax intend to do that in any uk field where the economics work.
I am not a tax expert and am not sure if the hur accumulated tax losses can flow through to prax directly on a group basis,so I am assuming that Prax would need to use hur to acquire additional profitable producing assets to be able to utilise the tax losses. That does appear to be their intent.
If there is a tax expert on this board,their input would be appreciated.
Kever
I believe that the tax credits apply to hur the company and not to the well.As long as new producing assets are acquired by hur the tax credits can be used.
I am not aware if the credits expire within3 years.If not, then prax has plenty of time to make acquisition.
Abusive name calling adds no value.
Senseman
Alas I have had a touch of gout recently……..very painful,but the medication is not halucinogenic.
My post was just an appreciation of your contributions and a measure of politeness which has sadly been lacking on this board all too often. Keep up the good work!
Senseman
Thanks for your kind words and thanks for your hard work and contributions to this board for many years.
I agree with your criticism of the bod…… but that ship has sailed and perhaps it s time to let it go.
Bids
I view the dcu’s as a depreciating asset insofar as they expire with no value after 3 years.The expectation of payments from the dcu up to the maximum represents future value rather than npv.
To get an npv of the value of the dcu’s would require a discount rate to be applied to the potential payments that would take into account the risks attendant to the price of oil,the timing of any payments and the risk of prax creative accounting and ofcourse the zero dcu value after 3 years.
The dcu market price at inception was and still is 1.77 p at which apparently some trades have taken place.
So 1.77 p surely represents an independent assessment of the dcu value before any payments have been made.
For myself ,I regard any payments from the dcu’s as a compulsory payment to me resulting from a court enforced take over of my tax sheltered Isa holdings by prax.The dcu’s are still registered in my Isas
Accordingly I shall not engage in any Cgt declarations or income tax declarations on dcu payments and will vigorously engage with the revenue if they reject that approach.
Rubin carter
I received 2 payments from II on June 21
0.83 p per share I respect of the cash purchase by prax
5.19 p per share in respect of the 2 hur dividends
Total 6.02 p per share
Hmrc rules are also clear that investments held in an Isa are not taxable and earnings made in an Isa do not need to be reported to hmrc on your tax return.
I will therefore allow my Isa managers to determine what my Isa holdings are ( or are not) and if they retain them in my isa’s then I will treat my Isa holdings as per hmrc rules
As and when that happens,so be it.As of now they are inside the Isa’s
Tomorrow is another day.
At the moment my prax dcu’s are held in my Isas
There are 3 ……Lloyd’s…..Barclays…. And II
As long as they remain in the Isa account any payments coming into the Isa acc will be tax free and not declarable on a tax return.
I am not responsible for how the Isa managers define and classify my holdings.
Ofcourse if the Isa managers remove the prax dcu’s from my Isa accounts and move them into a regular trading account,then they lose their tax free status and any payments originating from dcu’s will be taxable and declarable.
That is the postion
Any payments credited to an Isa account do not need to be entered into a Uk tax return.
Therefore if the hur dividend payments are received into an Isa they do not need to be declared
Similarly if payments from prax are credited to your Isa account they do not need to be declared.
If prax payments are credited to a regular non Isa trading account then they do need to be declared