Taxation of Chargeable Gains Act 1992 section 198K

Provisional application of section 198J

Section 198K allows oil and gas companies to claim provisional rollover relief under section 198J when they dispose of assets before they have actually reinvested the proceeds, provided they declare their intention to reinvest and claim the relief.

• An exploration and appraisal (E&A) company that disposes of assets can declare in its tax return that it intends to reinvest the proceeds in qualifying E&A expenditure or ring fence trade oil assets and claim section 198J relief, allowing the relief to apply provisionally in the meantime.
• The provisional relief remains in effect until the declaration is either withdrawn, replaced by an actual valid claim under section 198J, or the deadline expires — being the fourth anniversary of the last day of the accounting period in which the disposal took place.
• When the declaration ceases to have effect (whether in whole or in part), HMRC must make all necessary tax adjustments — including making or amending assessments, or repaying or discharging tax — even if the normal time limits for amending assessments have passed.
• Certain provisions from the general rollover relief rules in section 152 apply for the purposes of this section, adapted so that references to a trade are read as references to E&A activities or a ring fence trade, and all defined terms carry the same meanings as in section 198J.