Essar Oil (UK) provides an update on HMRC with regards its VAT commitments
Further to an article published on The Times website, itself an almost identical article to one published a week prior by Sky News, Essar Oil (UK) Limited (“EOUK” or “the Company”) once again provides an update on its current financial position and on-going discussions with HMRC with regards its VAT commitments.
$1.1 billion in liquidity, stronger trading environment
EOUK set out in detail its current financial status in a statement last week, in which it confirmed the considerable progress the Company had made to strengthen its financial position and agree new financing. As a result of that work over the past few months, EOUK has $1.1 billion in liquidity secured. Further, the Company has now returned to EBITDA positive and is therefore in a much stronger position to weather the continued challenge presented by the pandemic.
Meeting customer commitments despite supply disruption
Notably, EOUK has at this point successfully managed through the current supply disruption. By taking action in early August to retain its driver base, plus sign up smaller hauliers, EOUK has in fact increased vehicle shifts per day considerably, ensuring security of supply to its customers at this critical time. In early August EOUK was operating with c.52 vehicle shifts per day to over 70 shifts per day today. The shift plan is set to increase this further to well over 80 by the end of October according to current scheduling, bringing much needed fuel to EOUK’s for customers. EOUK remains committed to continuing to meet the demands of its customers.
Discussions with HMRC on-going
On future VAT payments, EOUK entered into a time-to-pay (“TTP”) arrangement with HMRC for a total of £770 million in April 2021. EOUK has already repaid HMRC £547 million leaving a balance of £223 million, as part of the Government opt-in scheme available to all corporates in the UK.
All companies under the TTP have been given until January 2022 to meet their commitments. EOUK had agreed to an accelerated schedule to make this payment. However, the recovery from the pandemic has been slower than predicted. EOUK is therefore in discussions with HMRC over a short extension to make those deferred VAT payments. Those discussions are positive and EOUK looks forward to a resolution soon.
EOUK has made positive changes to its internal governance in recent months, having adjusted its board, constituted an Advisory Council, appointed a new independent director and has adopted the Wates principles. It continues to work with leading advisers, including E&Y. Since the refinery was acquired by Essar, Essar has invested more than $1 billion in the refinery and is committed to developing initiatives that support its vision for a low-carbon future.
EOUK remains confident in its future, not least as the air travel market continues to open up and demand recovers.
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