Finance Act 1990

64 Limitation of losses on disposal of oil industry assets. U.K.

(1) This section applies to a disposal of an oil industry asset where the following conditions are fulfilled—

(a) the disposal occurs on or after 22nd January 1990;

(b) the person making the disposal held the asset on 31st March 1982 or, by virtue of paragraph 1 of Schedule 8 to the Finance Act 1988 (previous no gain/no loss disposals), is treated as having held the asset on that date for the purposes of section 96 of that Act (rebasing to 1982 of assets held on 31st March 1982);

(c) disregarding the following provisions of this section, for the purposes of capital gains tax, a loss would accrue on the disposal; and

(d) in the application of section 96 of the Finance Act 1988 to the disposal, subsection (2) of that section (the rebasing to 1982 values) does not apply because of the operation of subsection (3)(b) of that section (a smaller loss accrues if subsection (2) does not apply).

(2) For the purposes of this section, the following are “oil industry assets”—

(a) a licence under the M1 Petroleum (Production) Act 1934 or the M2 Petroleum (Production) Act (Northern Ireland) 1964;

(b) shares falling within sub-paragraph (2)(d) of paragraph 12 of Schedule 8 to the Finance Act 1988 (exclusion of certain disposals from elections under section 96(5) of the Finance Act 1988);

(c) oil exploration or exploitation assets, which expression shall be construed, subject to subsection (3) below, in accordance with sub-paragraphs (2C) and (2D) of the said paragraph 12; and

(d) any interest in an asset falling within paragraphs (a) to (c) above.

(3) In the application of sub-paragraph (2C)(b) of paragraph 12 of Schedule 8 to the M3 Finance Act 1988 for the purposes of subsection (2)(c) above, for the words from “the company whose shares” to “that company” there shall be substituted “the person making the disposal or a person connected with him”.

(4) Where this section applies to a disposal, there shall be determined for the purposes of this section the loss or gain which would accrue on the disposal on the following assumptions—

(a) that subsection (2) of section 96 of the Finance Act 1988 continues not to apply on the disposal; and

(b) that, in calculating the indexation allowance on the disposal, subsection (4) of section 68 of the M4 Finance Act 1985 (indexation based on 1982 values) does not apply;

and in the following provisions of this section the loss or gain (if any) on the disposal, determined on those assumptions, is referred to as the non-rebased loss or, as the case may be, the non-rebased gain.

(5) If there is a non-rebased loss on a disposal to which this section applies and that loss is less than the loss which accrues on the disposal as mentioned in subsection (1)(c) above, it shall be assumed for the purposes of capital gains tax that the loss which accrues on the disposal is the non-rebased loss.

(6) If there is a non-rebased gain on a disposal to which this section applies, it shall be assumed for the purposes of capital gains tax that the oil industry asset concerned was acquired by the person making the disposal for a consideration such that, on the disposal, neither a gain nor a loss accrues to him.

(7) If, on the determination referred to in subsection (4) above, there is neither a non-rebased loss nor a non-rebased gain on a disposal, subsection (6) above shall apply in relation to the disposal as if there were a non-rebased gain on the disposal.

Marginal Citations

M1 1934 c. 36.

M2 1964 c. 28 (N.I.).

M3 1988 c. 39.

M4 1985 c. 54.