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HMRC internal manual

Oil Taxation Manual

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HM Revenue & Customs
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Capital gains: non residents: exit charges for assets situated in UK continental shelf and used in foreign fields

The deemed disposal rules potentially have application in relation to certain facilities situated in the UK continental shelf which are normally used by foreign fields only. Inter-government treaties have accepted that the relevant assets, owned by non-resident companies, will be treated as outside the scope of UK chargeable gains where there is no UK or UK continental shelf field use.

However, if the pipelines (and any related assets) begin to transport UK/UK Continental Shelf oil or gas, then the non-residents will be regarded as commencing a UK trade through a branch or agency. When UK/UK Continental Shelf use ceases, a deemed disposal will occur under TCGA92\S199(2). The gain, after rebasing and indexation, will be chargeable in full notwithstanding that the UK use may amount to a very small percentage of the overall use of the facilities during the period of gain.

The operation of these provisions may be further complicated by interaction with the terms of any relevant Double Taxation Agreement. Companies wishing to obtain assurance about the taxation treatment arising in the event of a transaction, or potential transaction, which may fall within this provision should send an application to the Customer Relationship Manager (CRM) where the business is a Large Business customer; or in other cases HMRC Clearances Team, Alexander House, 21 Victoria Avenue, Southend on Sea, Essex SS99 1BD. E-mail address - hmrc.southendteam@hmrc.gsi.gov.uk