Finance Bill Tracking Service 2010 | Budget 2010

BN08 NORTH SEA FISCAL REGIME: REINVESTMENT RELIEF

Who is likely to be affected?

1. Oil and gas companies that operate in the UK or on the UK Continental Shelf (UKCS).

General description of the measure

2. Budget 2009 announced a package of measures that were introduced in the Finance Act (FA) 2009 to provide support through the UK oil and gas fiscal regime for investment in the UK and UKCS. This measure will make a small change to one of these measures.

3. FA 2009 provided that chargeable gains would not arise in some circumstances where disposal proceeds are reinvested in new oil trade assets and the disposal and acquisition qualify for rollover relief. The measure ensures this reinvestment relief can apply as intended in a group context when the company making the reinvestment is not the company making the disposal.

4. The Government intends to legislate this measure in a Finance Bill to be introduced as soon as possible in the next Parliament.

Operative date

5. The change will have effect in relation to disposals made on or after 24 March 2010.

Current law and proposed revisions

6. The FA 2009 legislation was intended to apply in a group context where the disposal is made by one company in a group and the acquisition is made by another company in the same group, but a technical oversight prevents the legislation from applying in such circumstances. The legislation will now be amended so that it can apply as intended.

Further advice

7. If you have any questions about this change please contact Hugh Hedges on 020 7438 6576 (email: hugh.hedges@hmrc.gsi.gov.uk) or Paul Philip on 020 7438 6993 (email: paul.philip@hmrc.gsi.gov.uk). Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk