Taxation of Chargeable Gains Act 1992 section 198C

Provisional application of sections 198A and 198B

Section 198C allows a person carrying on a ring fence trade (typically oil and gas extraction activities) to provisionally apply ring fence reinvestment relief when they have disposed of assets but have not yet completed the reinvestment in new assets.

• A person carrying on a ring fence trade who disposes of assets can declare in their tax return that they intend to reinvest the proceeds in new qualifying assets and claim ring fence reinvestment relief under section 198A or 198B, even before the reinvestment has actually taken place.
• While the declaration remains in force, the tax position is calculated as though the reinvestment had already been completed and a formal claim made — effectively deferring the chargeable gain on a provisional basis.
• The declaration ceases to have effect if it is withdrawn or superseded by a formal claim before the relevant deadline, or automatically on the relevant day — being the third anniversary of the 31 January following the tax year of disposal (for capital gains tax) or the fourth anniversary of the end of the accounting period of disposal (for corporation tax).
• When the declaration ceases to have effect, HMRC will make all necessary adjustments — including amending assessments or repaying tax — regardless of any normal time limits, and if the transaction turns out not to qualify as a ring fence reinvestment but does qualify for ordinary roll-over relief, the declaration can instead be treated as a provisional claim under section 153A.