Taxation of Chargeable Gains Act 1992 section 198I

Exploration, appraisal and development expenditure

Section 198I treats exploration, appraisal and development expenditure incurred in a ring fence trade as the acquisition of qualifying assets for the purposes of ring fence roll-over relief.

• Expenditure on oil and gas exploration, appraisal and development activities (as recognised under generally accepted accounting practice) within a ring fence trade is deemed to be the acquisition of new qualifying assets for roll-over relief purposes.
• The deemed assets are treated as oil assets taken into use solely for the ring fence trade and falling within the eligible classes of assets for roll-over relief.
• The provisional relief rules apply to this expenditure, but without the usual restriction that would otherwise limit their scope.
• This special treatment applies only within the ring fence reinvestment relief rules and does not alter how the standard roll-over relief provisions operate outside that context.