SCHEDULES
SCHEDULE 40Oil: chargeable gains
Part 1Licence swaps
1
TCGA 1992 is amended as follows.
2
In section 35(3) (assets held on 31 March 1982, including assets held on 6 April 1965)—
a
in paragraph (c), omit the “or” at the end, and
b
after that paragraph insert—
ca
where, by virtue of section 195B, 195C or 195E, neither a gain nor a loss accrues to the person making the disposal, or
3
In section 55 (assets owned on 31 March 1982 or acquired on a no gain/no loss disposal), after subsection (5) insert—
5A
For the purposes of subsection (5), a disposal is also a no gain/no loss disposal if it is one on which, by virtue of section 195B, 195C or 195E, neither a gain nor a loss accrues to the person making the disposal; but, in such a case, subsection (6)(b) below does not apply.
4
In section 175(2C)(b)
(replacement of business assets by members of a group), after “applies” insert “
or is one where, by virtue of section 195B, 195C or 195E, neither a gain nor a loss accrues to the person making the disposal
”
.
5
After section 195 insert—
195AOil licence swaps
1
Sections 195B to 195E apply for the purposes of corporation tax on chargeable gains.
2
In those sections—
“licence-consideration swap” means a case where conditions A, B, C and D are met;
“mixed-consideration swap” means a case where conditions A, B, C and E are met.
3
Condition A is that a company (“company A”) disposes of one or more UK licences to another company (“company B”), by way of a bargain at arm's length (“disposal A”).
4
Condition B is that company B disposes of one or more UK licences to company A, by way of a bargain at arm's length (“disposal B”).
5
Condition C is that either or both of the following paragraphs applies—
a
the licence, or at least one of the licences, comprised in disposal A relates to a developed area;
b
the licence, or at least one of the licences, comprised in disposal B relates to a developed area.
6
Condition D is that both—
a
disposal A is the only consideration given for disposal B, and
b
disposal B is the only consideration given for disposal A.
7
Condition E is that either—
a
disposal A is the only consideration given for disposal B, or
b
disposal B is the only consideration given for disposal A,
(and accordingly one of the disposals is part of the consideration given for the other disposal).
8
In this section and sections 195B to 196 a reference to disposal of a UK licence includes—
a
a disposal of an interest in a UK licence, and
b
a disposal of a UK licence, or an interest in a UK licence, only so far as the licence relates to part of the licensed area.
195BLicence-consideration swap
1
This section applies to a licence-consideration swap.
2
Each company participating in the swap is to be treated as follows.
3
As regards the licence, or each licence, which the company disposes of, the company is to be treated as if it had disposed of that licence for a consideration of such amount as to secure that on the disposal neither a gain nor a loss accrues to the company.
4
In a case where the company acquires only one licence, the company is to be treated as if it had acquired the licence for a consideration of the same amount as the deemed disposal consideration.
5
In a case where the company acquires two or more licences, as regards each licence acquired, the company is to be treated as if it had acquired that licence for a consideration of—
where—
DDC is the deemed disposal consideration,
A is the value of the licence acquired, and
TA is total value of all the licences acquired.
6
In this section “deemed disposal consideration”, in relation to a company participating in the swap, means—
a
the amount of the consideration for which the company is, under subsection (3), treated as having disposed of its licence (if the company disposes of only one licence), or
b
the aggregate of all such amounts (if the company disposes of two or more licences).
195CCompany that receives mixed consideration: N exceeds C
1
This section applies to a mixed-consideration swap if—
a
the no gain/no loss loss amount (“N”) of the company that receives the mixed consideration (“company R”), exceeds
b
the amount of non-licence consideration (“C”) which company R receives.
2
In a case where company R acquires only one licence, company R is to be treated as if it had acquired the licence for a consideration of—
3
In a case where company R acquires two or more licences, as regards each licence acquired, company R is to be treated as if it had acquired the licence for a consideration of—
where—
A is the value of the licence acquired, and
TA is total value of all the licences acquired.
4
The disposal by company R of a licence under the swap is to be taken to be one on which neither a gain nor a loss accrues.
5
But (despite subsection (4)), the disposal by company R is not a no gain/no loss disposal for the purposes of section 56.
6
For the purposes of the application of sections 53 and 54, any enactment is to be disregarded insofar as it provides that, if the other company which acquires a licence under the swap (“company G”) subsequently disposes of the licence, company R's acquisition of the licence is to be treated as company G's acquisition of it.
7
In this section the reference to the no gain/no loss amount of company R is a reference to—
a
in a case where company R disposes of only one licence, company R's no gain/no loss amount in relation to that disposal, or
b
in a case where company R disposes of two or more licences, the aggregate of company R's no gain/no loss amounts in relation to all of those disposals.
195DCompany that receives mixed consideration: N does not exceed C
1
This section applies to a mixed-consideration swap if—
a
the no gain/no loss amount (“N”) of the company that receives the mixed consideration (“company R”) does not exceed
b
the amount of non-licence consideration (“C”) which company R receives.
2
As regards the licence, or each licence, which company R acquires, company R is to be treated as if it had acquired the licence for nil consideration.
3
In a case where company R disposes of only one licence, company R is to be treated as if, on the disposal of the licence, there had arisen a gain of—
4
In a case where company R disposes of two or more licences, as regards each licence disposed of, company R is to be treated as if, on the disposal of the licence, there had arisen a gain of—
where—
D is the value of the licence disposed of, and
TD is total value of all the licences disposed of.
195ECompany that gives mixed consideration
1
This section applies to a mixed-consideration swap—
a
whatever the no gain/no loss amount (“N”) of the company that gives the mixed consideration (“company G”), and
b
whatever the amount of the non-licence consideration (“C”) which company G gives.
2
In a case where company G acquires only one licence, company G is to be treated as if it had acquired the licence for a consideration of—
3
In a case where company G acquires two or more licences, as regards each licence acquired, company G is to be treated as if it had acquired the licence for a consideration of—
where—
A is the value of the licence acquired, and
TA is total value of all the licences acquired.
4
The disposal by company G of a licence under the swap is to be taken to be one on which neither a gain nor a loss accrues.
5
But (despite subsection (4)), the disposal by company G is not a no gain/no loss disposal for the purposes of section 56.
6
For the purposes of the application of sections 53 and 54, any enactment is to be disregarded insofar as it provides that, if the other company which acquires a licence under the swap (“company R”) subsequently disposes of the licence, company G's acquisition of the licence is to be treated as company R's acquisition of it.
7
In this section the reference to the no gain/no loss amount of company G is a reference to—
a
in a case where company G disposes of only one licence, company G's no gain/no loss amount in relation to that disposal, or
b
in a case where company G disposes of two or more licences, the aggregate of company G's no gain/no loss amounts in relation to all of those disposals.
6
1
Section 196 (interpretation of sections 194 and 195) is amended as follows.
2
In the heading, for “and 195” substitute “
to 195E
”
.
3
In subsection (1), after “section 194” insert “
and this section
”
.
4
After subsection (1A) insert—
1B
In sections 195A to 195E, a reference to a UK licence that relates to a developed area is a reference to any UK licence apart from one that relates to an undeveloped area.
5
In subsection (2), for “and (1A)” substitute “
to (1B)
”
.
6
In subsection (3), after “(1)” insert “
or (1B)
”
.
7
In subsection (5)—
a
for “and 195” substitute “
to 195E
”
,
b
after the definition of “licence” insert—
“licence-consideration swap” has the meaning given in section 195A(2);
c
after the definition of “licensee” insert—
“mixed consideration” means consideration that consists partly of disposal of a UK licence;
“mixed-consideration swap” has the meaning given in section 195A(2);
“no gain/no loss amount”, in relation to a company that disposes of a UK licence, means the amount that would be taken to be the consideration for the disposal if section 56(2) applied to the disposal;
“non-licence consideration” means consideration that does not consist of disposal of a UK licence, as determined at the time the swap arrangements are entered into;
“swap arrangements”, in relation to a licence-consideration swap or a mixed-consideration swap, means the arrangements under which the swap takes place;
8
After subsection (5A) insert—
5B
In any of sections 195B to 195E, a reference to the value of a licence comprised in disposal A or disposal B (see section 195A) is a reference to the value of the licence as determined under the swap arrangements at the time the swap arrangements are entered into.
7
In Schedule 3 (assets held on 31 March 1982), in paragraph 1(2)
(meaning of no gain/no loss disposal), after “provisions” insert “
or any of sections 195B, 195C or 195E
”
.
8
The amendments made by this Part have effect in relation to disposals made on or after 22 April 2009.