Essar Oil in Talks to Extend January UK VAT Payment Deadline

By Reuters
Reuters
Reuters
September 26, 2021 Updated: September 26, 2021

Reuters—Essar Oil UK, the operator of Britain’s Stanlow oil refinery, is in talks with UK authorities over extending a January deadline to repay hundreds of millions of pounds in deferred taxes, the company said on Sunday.

Essar Oil said it still needed to pay £223 million ($305 million) to HM Revenue & Customs (HMRC) by January, confirming an earlier report in the Sunday Times newspaper, which said the company had used the government’s pandemic VAT deferral scheme last year.

Essar, in response to a Reuters request for comment, said that it had already repaid HMRC £547 million ($749 million) out of a total of £770 million ($1.05 billion).

The company had agreed to an accelerated schedule with HMRC to make the rest of the payment, which it has not been able to meet due to a slower than expected recovery from the pandemic.

In a statement to Reuters, Essar said it is in discussions with HMRC over a “short extension” to make the deferred VAT payments.

“Those discussions are positive and EOUK looks forward to a resolution soon,” it added.

It also said that the company had returned to positive EBITDA (earnings before interest, taxes, depreciation, and amortisation) and therefore is in a “much stronger position to weather the continued challenge presented by the pandemic.”

Essar in May secured more than $850 million in financing for the Stanlow refinery after hitting short-term financial difficulties.

Stanlow, which employs 900 people directly and a further 800 contractors on-site, supplies road fuel to northwest England, and jet fuel to Manchester and Birmingham airports.

Lengthy queues of vehicles have been snaking their way to gas stations in Britain where an acute shortage of truck drivers has led to fuel rationing in a number of garages and some pumps running dry, and prompted the government to consider issuing temporary work visas.

Reuters
Reuters