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TCGA92\S199

TCGA92\S199(1) provides that where an exploration or exploitation asset, which is a mobile asset, ceases to be chargeable in relation to a person by virtue of ceasing to be dedicated to an oil field in which he, (or a person connected with him), is or has been a participator (that is, licence holder), then the owner is deemed to have disposed of the asset and reacquired it at its market value.

This ensures that a deemed charge does not arise each time a mobile asset moves out of the UK Continental Shelf for any reason if it remains dedicated to an oil field (for example, a floating production platform undergoing repairs at a foreign shipyard). It also ensures that no charge arises where in the same claim period (for PRT purposes) a mobile asset ceases to be dedicated to one field but becomes dedicated to another field in which the vendor (or a connected person) is a participator.

Although there is no definition of when an asset ‘ceases to be dedicated to an oil field�, it is normally accepted that this will occur when the conditions at OTA83\S2(1) and OTA83\S2(2) are no longer satisfied.

A charge by virtue of TCGA92\S199 will arise when the asset is no longer dedicated to a field in which the non-resident (or a connected person) is, or has been, a participator or when UK Continental Shelf exploration or exploitation activities cease finally. And it should be noted that a further charge may arise on the occasion of a subsequent actual disposal of a mobile asset (see OT30825).