Taxation of Chargeable Gains Act 1992 section 196

Interpretation of sections 194 to 195F

Section 196 provides the definitions and interpretation rules needed to understand the tax treatment of disposals of oil licences and oil licence swaps covered by sections 194 to 195F.

• A UK licence relates to an "undeveloped area" if no consent for development has been granted, and no development programme has been served on or approved for the licensee, in respect of any part of the licensed area.
• For non-UK licences (foreign oil concessions), an area is undeveloped if no actual development has taken place and no development conditions have been satisfied through the grant of consent or approval of a development programme by the relevant overseas authorities.
• When determining the consideration, non-licence consideration, or value of a licence in oil licence swap arrangements, valuations are normally made at the time the swap arrangements are entered into — but if economic benefits and liabilities pass at a different "effective time", valuations are made at that effective time instead.
• The section defines key terms including "UK licence", "foreign oil concession", "licensed area", "licensee", "appropriate authority", "oil", "no gain/no loss amount", "licence-consideration swap", "mixed-consideration swap", and "swap arrangements".