Taxation of Chargeable Gains Act 1992

199 Exploration or exploitation assets: deemed disposalsU.K.

(1)Where an exploration or exploitation asset which is a mobile asset ceases to be chargeable in relation to a person by virtue of ceasing to be dedicated to an oil field in which he, or a person connected with him, is or has been a participator, he shall be deemed for all purposes of this Act—

(a)to have disposed of the asset immediately before the time when it ceased to be so dedicated, and

(b)immediately to have reacquired it,

at its market value at that time.

(2)Where a person [F1in respect of whom the residence condition (see section 2(1A)) is not met] ceases to carry on a trade in the United Kingdom through a branch or agency, he shall be deemed for all purposes of this Act—

(a)to have disposed immediately before the time when he ceased to carry on the trade in the United Kingdom through a branch or agency of every asset to which subsection (3) below applies, and

(b)immediately to have reacquired every such asset,

at its market value at that time.

(3)This subsection applies to any exploration or exploitation asset, other than a mobile asset, used in or for the purposes of the trade at or before the time of the deemed disposal.

(4)A person shall not be deemed by subsection (2) above to have disposed of an asset if, immediately after the time when he ceases to carry on the trade in the United Kingdom through a branch or agency, the asset is used in or for the purposes of exploration or exploitation activities carried on by him in the United Kingdom or a designated area.

(5)Where in a case to which subsection (4) above applies the person ceases to use the asset in or for the purposes of exploration or exploitation activities carried on by him in the United Kingdom or a designated area, he shall be deemed for all purposes of this Act—

(a)to have disposed of the asset immediately before the time when he ceased to use it in or for the purposes of such activities, and

(b)immediately to have reacquired it,

at its market value at that time.

(6)For the purposes of this section an asset is at any time a chargeable asset in relation to a person if, were it to be disposed of at that time, any chargeable gains accruing to him on the disposal—

(a)would be gains in respect of which he would be chargeable to capital gains tax under section 10(1), or

(b)would form part of his chargeable profits for corporation tax purposes by virtue of section [F210B].

(7)In this section—

(a)“exploration or exploitation asset” means an asset used in connection with exploration or exploitation activities carried on in the United Kingdom or a designated area;

(b)“designated area” and “exploration or exploitation activities” have the same meanings as in section 276; and

(c)the expressions “dedicated to an oil field” and “participator” shall be construed as if this section were included in Part I of the M1Oil Taxation Act 1975.