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Legislation
Taxation of Chargeable Gains Act 1992

Crossheading Oil exploration and exploitation

  • Section 193 Roll-over relief not available for gains on oil licences.
  • Section 194 Disposals of oil licences relating to undeveloped areas.
  • Section 195 Allowance of certain drilling expenditure etc.
  • Section 195A Oil licence swaps
  • Section 195B Licence-consideration swap
  • Section 195C Company that receives mixed consideration: N exceeds C
  • Section 195D Company that receives mixed consideration: N does not exceed C
  • Section 195E Company that gives mixed consideration
  • Section 195F Reimbursed expenditure
  • Section 196 Interpretation of sections 194 to 195F .
  • Section 197 Disposals of interests in oil fields etc: ring fence provisions.
  • Section 198 Replacement of business assets used in connection with oil fields.
  • Section 198A Ring fence reinvestment: whole consideration reinvested
  • Section 198B Ring fence reinvestment: part of consideration reinvested
  • Section 198C Provisional application of sections 198A and 198B
  • Section 198D No double claims
  • Section 198E Ring fence reinvestments and disposal consideration
  • Section 198F Qualification for roll-over relief
  • Section 198G Qualification for section 153 relief
  • Section 198H Acquisition by member of same group
  • Section 198I Exploration, appraisal and development expenditure
  • Section 198J Oil and gas: reinvestment after pre-trading disposal
  • Section 198K Provisional application of section 198J
  • Section 198L Expenditure by member of same group
  • Section 199 Exploration or exploitation assets: deemed disposals
  • Section 200 Limitation of losses on disposal of oil industry assets held on 31st March 1982.
  1. Oil exploration and exploitation
  2. Disposals of oil licences relating to undeveloped areas.

Section 194 | Disposals of oil licences relating to undeveloped areas.

From legislation.gov.uk

(1)In this section any reference to a disposal (including a part disposal) is a reference to a disposal made by way of a bargain at arm’s length.

(2)If, at the time of the disposal, the licence relates to an undeveloped area, then, to the extent that the consideration for the disposal consists of—

(a)another licence which at that time relates to an undeveloped area or an interest in another such licence, or

(b)an obligation to undertake exploration work or appraisal work in an area which is or forms part of the licensed area in relation to the licence disposed of,

the value of that consideration shall be treated as nil for the purposes of this Act.

(3)If the disposal of a licence which, at the time of the disposal, relates to an undeveloped area is part of a larger transaction under which one party makes to another disposals of 2 or more licences, each of which at the time of the disposal relates to an undeveloped area, the reference in subsection (2)(b) above to the licensed area in relation to the licence disposed of shall be construed as a reference to the totality of the licensed areas in relation to those 2 or more licences.

(4)In relation to a disposal of a licence which, at the time of the disposal, relates to an undeveloped area, being a disposal—

(a)which is a part disposal of the licence in question, and

(b)part but not the whole of the consideration for which falls within paragraph (a) or paragraph (b) of subsection (2) above,

(i)the relevant allowable expenditure, as defined in section 53; and

(ii)the indexation allowance on the disposal.

section 42 shall not apply unless the amount or value of the part of the consideration which does not fall within one of those paragraphs is less than the aggregate of the amounts which, if the disposal were a disposal of the whole of the licence rather than a part disposal, would be—

(5)Where section 42 has effect in relation to such a disposal as is referred to in subsection (4) above, it shall have effect as if, for subsection (2) thereof, there were substituted the following subsection—

(2)The apportionment shall be made by reference to—

(a)the amount or value of the consideration for the disposal on the one hand (call that amount or value A), and

(b)the aggregate referred to in section 194(4) on the other hand (call that aggregate C),

Formula

AC

and the fraction of the said sums allowable as a deduction in computing the amount of the gain (if any) accruing on the disposal shall be—

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