North Sea tax revenue slumps to 40 year low

The impact of the falling oil price was reflected in figures showing that offshore Corporation Tax receipts amounted to £538m in 2015-16.

But that was offset by petroleum revenue tax which showed a deficit of minus £503m.

Overall the offshore industry only just managed to remain in surplus at £3m.

The £35m tax total is the lowest since 1975/76, when receipts were £25m.

The dramatic reversal from a flood of income just a few years ago, to a trickle now, comes in the wake of falling production, higher operating costs and the collapse of global oil prices.

The industry, which has already contracted sharply, admitted it would struggle to sustain even its current scale with oil hovering about $40 a barrel.

The latest tax haul was jumped upon by opponents of Scottish nationalists as the SNP continues to develop a new economic case for leaving the UK following the collapse of the oil price and failure of its currency policy during the 2014 referendum on independence.

Willie Rennie, leader of the Scottish Liberal Democrats, said: “The SNP leadership’s judgment on the oil industry in the run-up to the independence referendum was wildly misplaced. As a result its credibility has been damaged irreversibly.”

An SNP spokesman said: “The SNP Government’s oil price forecast was in line with most international estimates and below the UK Government’s own prediction. But the case for an independent Scotland was not, and is not, founded on the price of oil.”

Economist John McLaren of Glasgow University said: “The most important thing is not necessarily about tax revenue, but is about keeping jobs in the North Sea.”