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HMRC internal manual

Oil Taxation Manual

HM Revenue & Customs
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Capital gains: non residents: introduction and general charge


This part of the manual deals with the rules for taxing chargeable gains as they apply to non- resident companies who hold, directly or indirectly, oil and oil related rights, interests and assets.

The application of these domestic charging provisions is subject to the terms of any Double Taxation Agreement between the UK and the home country of the non-resident. Detailed guidance on the scope and application of the legislation as it relates to trading activities of non-resident offshore contractors can be found at OT40000+.

The disposals by non-residents of certain oil and oil-related assets are brought within the general charge to capital gains by virtue of the operation of TCGA92\S276. This operates by:

  1. Deeming the territorial sea to be part of the UK for all purposes of the taxation of chargeable gains (TCGA92\S276(1)).
  2. Treating gains on the disposal of assets situated in the continental shelf as gains on the disposal of assets situated in the UK (TCGA92\S276(2) and TCGA92\S276(3)).
  3. Treating gains on the disposal of such assets as if they were gains on disposals of assets used for the purposes of a trade carried on in the UK through a branch or agency (TCGA92\S276(7)).

TCGA92\S276 also brings into the charge various other oil and oil-related rights and interests.