Section 198E — Taxation of Chargeable Gains Act 1992: Ring fence reinvestments and disposal consideration

Ring fence reinvestments and disposal consideration 198E 1 This section applies for the purposes of sections 198A to 198G.

2 A disposal and acquisition is a ring fence reinvestment if—

a the disposal was—

i a material disposal, or ii a disposal of a UK licence which relates to an undeveloped area, b the old assets were used only for the purposes of P's ring fence trade, c the new assets are taken into use, and used only, for the purposes of one or more of the following trades—

i P's ring fence trade;

ii if P is a member of a group of companies (within the meaning given in section 170), a ring fence trade of another member of that group, and d the new assets are oil assets.

3 If the disposal consists of—

a disposal of a licence to which section 195D(3) applies, or b disposal of two or more licences to which section 195D(4) applies, the consideration for the disposal is to be taken to be the whole of the non-licence consideration obtained on the disposal (which is referred to as “ C ” in section 195D).

4 Accordingly, in sections 198A to 198G (including section 198A(4)), any reference to the consideration obtained on the disposal has effect subject to subsection (3).

5 Each of the following is an “ oil asset ” for the purposes of this section—

a an interest in oil to be won from an oil field, b an asset used in connection with an oil field, c a structure which is to be placed on the seabed of the United Kingdom continental shelf, d an asset used wholly in the winning of oil, or in the measuring of oil won, in the United Kingdom otherwise than from an oil field, e an asset used for the initial treatment or storage of oil in the United Kingdom, f an asset used for the transportation of oil from an oil field to the United Kingdom, and g a UK licence which relates to an undeveloped area.

6 Section 12 of the Oil Taxation Act 1975 (interpretation of Part 1 of that Act) applies for the interpretation of subsection (5)(a) to (f).

7 Expressions used in this section and in section 152 have the same meanings in this section as in section 152.

8 In this section a reference to a UK licence which relates to an undeveloped area has the same meaning as in section 194 (see section 196).

9 In this section— “ material disposal ” has the meaning given in section 197; “ ring fence trade ” has the meaning given in section 198.