Taxation of Chargeable Gains Act 1992 section 195A

Oil licence swaps

Section 195A defines what constitutes an "oil licence swap" for corporation tax on chargeable gains purposes, setting out the conditions that must be met for a transaction to qualify as either a "licence-consideration swap" or a "mixed-consideration swap."

• Two types of oil licence swap are defined: a "licence-consideration swap" (where UK licences are exchanged purely for other UK licences with no other consideration) and a "mixed-consideration swap" (where one side of the exchange involves additional consideration beyond the licences themselves).
• Both types require two companies to exchange UK licences at arm's length, and at least one licence involved in the exchange must relate to a developed area.
• In a licence-consideration swap, each disposal of licences is the sole consideration for the other — a pure exchange with no money or other assets changing hands. In a mixed-consideration swap, only one side's disposal serves as sole consideration for the other, meaning the second disposal forms only part of the consideration for the first.
• References to disposal of a UK licence throughout these provisions include disposals of partial interests in a licence and disposals that relate to only part of the licensed area.