What does section 198F of the Taxation of Chargeable Gains Act 1992 do?

Section 198F establishes a single qualification test for determining whether a disposal and acquisition of oil industry ring fence assets qualifies for roll-over relief. It applies to disposals made on or after 22 April 2009 and supports the ring fence reinvestment rules allowing UK oil and gas companies to defer chargeable gains when reinvesting proceeds in new qualifying assets.

What conditions must be met to qualify for roll-over relief under section 198F?

Two conditions must be satisfied. First, the sale proceeds must be reinvested in acquiring new business assets within the permitted time frame. Second, the standard roll-over relief provisions under section 152 must be capable of applying to both the disposal and the acquisition, assuming an appropriate claim were to be made.

Which provisions are disregarded when applying the section 198F qualification test?

When applying the qualification test, two specific provisions must be ignored. The restriction in section 152(8), which can limit roll-over relief in certain circumstances, is disregarded entirely. The ring fence reinvestment provisions in section 198A are also set aside, ensuring the qualification test is not affected by the very rules it supports.

Which other provisions of the ring fence rules does section 198F support?

The section 198F qualification test is directly relevant to the ring fence reinvestment provisions in sections 198A and 198B and to the partial replacement rules in section 198G. It also takes into account the rules for partial reinvestment of proceeds and special rules for replacement of assets used in connection with oil fields.

Taxation of Chargeable Gains Act 1992 section 198F

Qualification for roll-over relief

Section 198F sets out the conditions that must be satisfied for a disposal and acquisition of oil industry ring fence assets to qualify for roll-over relief, applying to disposals made on or after 22 April 2009.

To qualify, the sale proceeds must be reinvested in acquiring new business assets within the permitted time frame, and the standard roll-over relief conditions under section 152 must be capable of applying if a claim were made.
When assessing qualification, certain provisions are specifically excluded: the restriction in section 152(8) and the ring fence reinvestment rules in section 198A are both to be ignored.
Subject to those exclusions, all other relevant circumstances must be considered, including the rules for partial reinvestment of proceeds and the special rules for replacement of assets used in connection with oil fields.
This qualification test is relevant to the ring fence reinvestment provisions in sections 198A and 198B and to the partial replacement rules in section 198G.

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