The Viking Energy project is to be restructured to protect its favourable tax position should it go ahead, a meeting of Shetland Charitable Trust agreed today.
The move could boost the potential income to the trust by 35 per cent, according to a report by financial controller Jeff Goddard.
Shetland’s half share with SSE of the venture, known at present as Viking Energy Limited, is currently 90 per cent owned by the trust, with 10 per cent being owned by Viking Wind Limited, the company set up by the owners of Burradale.
However it has been deemed that this structure is not “tax efficient”, and it has now been agreed that Viking Energy Limited Liability Partnership will replace the current general partnership.
Mr Goddard said the proposal was to create a further LLP to be the Shetland partner, called Viking Energy Shetland LLP (VES LLP). As a partnership, any share of taxable profits arriving from VE LLP will pass through VES LLP to be dealt with by the partners. Viking Energy Ltd will receive 90 per cent of the taxable profits, and these can be gift aided on to Shetland Charitable Trust. This means that the trust will not pay tax on its share of the profits of the windfarm. The remaining taxable profit that passes through VES LLP will be dealt with by Viking Wind Limited.
There will not be any other changes in the commercial relationship.
Mr Goddard said the general partnership was appropriate for the pre-consent stage of the project, but were consent to be granted such a partnership would not be attractive to potential investors as it would be unable to grant a “floating charge”. This is essentially security for a bank loan. He said it was important to emphasise that the security would take the form of the windfarm’s assets and not those of the charitable trust.