Taxation of Chargeable Gains Act 1992 section 198

Replacement of business assets used in connection with oil fields

Section 198 restricts the availability of rollover relief when gains arise from disposals of interests in oil fields and related assets, ensuring that any replacement assets are used exclusively within the ring fence trade.

• Rollover relief on a material disposal (as defined in section 197) is only available if the replacement assets are taken into use and used solely for the purposes of the ring fence trade — that is, oil extraction and related activities.
• Where the replacement asset is a depreciating asset, the held-over gain crystallises on the earliest of: disposal of the new asset, cessation of its use for the ring fence trade, or ten years from its acquisition.
• Where a group of companies claims rollover relief, only those group members that actually carry on a ring fence trade are treated as carrying on a single trade, and only their ring fence activities count towards that single trade.
• A disposal of an asset such as plant used in a field, without any accompanying disposal of an interest in the field itself, does not constitute a material disposal and therefore falls outside these restrictions.