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HMRC internal manual

Oil Taxation Manual

Capital gains: non residents: branch exit charges for dedicated mobile assets


TCGA92\S199(1) provides that 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 (that is, licence holder), then the owner is deemed to have disposed of the asset and reacquired it at its market value.

This ensures that a deemed charge does not arise each time a mobile asset moves out of the UK Continental Shelf for any reason if it remains dedicated to an oil field (for example, a floating production platform undergoing repairs at a foreign shipyard). It also ensures that no charge arises where in the same claim period (for PRT purposes) a mobile asset ceases to be dedicated to one field but becomes dedicated to another field in which the vendor (or a connected person) is a participator.

Although there is no definition of when an asset ‘ceases to be dedicated to an oil field’, it is normally accepted that this will occur when the conditions at OTA83\S2(1) and OTA83\S2(2) are no longer satisfied.

A charge by virtue of TCGA92\S199 will arise when the asset is no longer dedicated to a field in which the non-resident (or a connected person) is, or has been, a participator or when UK Continental Shelf exploration or exploitation activities cease finally. And it should be noted that a further charge may arise on the occasion of a subsequent actual disposal of a mobile asset (see OT30825).