(1)The territorial sea of the United Kingdom shall for all purposes of the taxation of chargeable gains (including the following provisions of this section) be deemed to be part of the United Kingdom.
(2)In this section—
(a)“exploration or exploitation activities” means activities carried on in connection with the exploration or exploitation of so much of the seabed and subsoil and their natural resources as is situated in the United Kingdom or a designated area; and
(b)“exploration or exploitation rights” means rights to assets to be produced by exploration or exploitation activities or to interests in or to the benefit of such assets; and
(c)references to the disposal of exploration or exploitation rights include references to the disposal of shares deriving their value or the greater part of their value directly or indirectly from such rights, other than shares quoted on a recognised stock exchange; and
(d)“shares” includes stock and any security as defined in section 254(1) of the Taxes Act; and
(e)“designated area” means an area designated by Order in Council under section 1(7) of the [1964 c. 29.] Continental Shelf Act 1964.
(3)Any gains accruing on the disposal of exploration or exploitation rights shall be treated for the purposes of this Act as gains accruing on the disposal of assets situated in the United Kingdom.
(4)Gains accruing on the disposal of—
(a)exploration or exploitation assets which are situated in a designated area, or
(b)unquoted shares deriving their value or the greater part of their value directly or indirectly from exploration or exploitation assets situated in the United Kingdom or a designated area or from such assets and exploration or exploitation rights taken together,
shall be treated for the purposes of this Act as gains accruing on the disposal of assets situated in the United Kingdom.
(5)For the purposes of this section, an asset disposed of is an exploration or exploitation asset if either—
(a)it is not a mobile asset and it is being or has at some time been used in connection with exploration or exploitation activities carried on in the United Kingdom or a designated area; or
(b)it is a mobile asset which has at some time been used in connection with exploration or exploitation activities so carried on and is dedicated to an oil field in which the person making the disposal, or a person connected with him, is or has been a participator;
and expressions used in paragraphs (a) and (b) above have the same meaning as if those paragraphs were included in Part I of the [1975 c. 22.] Oil Taxation Act 1975.
(6)In subsection (4)(b) above “unquoted shares” means shares other than those which are quoted on a recognised stock exchange; and references in subsections (7) and (8) below to exploration or exploitation assets include references to unquoted shares falling within subsection (4)(b).
(7)Gains accruing to a person not resident in the United Kingdom on the disposal of exploration or exploitation rights or of exploration or exploitation assets shall, for the purposes of capital gains tax or corporation tax on chargeable gains, be treated as gains accruing on the disposal of assets used for the purposes of a trade carried on by that person in the United Kingdom through a branch or agency.
(8)In relation to exploration or exploitation rights or exploration or exploitation assets disposed of by a company resident in a territory outside the United Kingdom to a company resident in the same territory or in the United Kingdom, sections 171 to 174 and 178 to 181 shall apply as if in section 170 subsections (2)(a) and (9) were omitted.