OT30044 - Capital Gains

Undeveloped Area. Definition.

1. TCGA92\s194(2) requires that the licence disposed of and, if appropriate, the licence swapped for it, relate to an undeveloped area at the time of the disposal.
2. TCGA92\s196(1) provides that a UK licence relates to an "undeveloped area" at any time if no development consent has been granted for any part of the licensed area and no programme of development has been served on the licensee or approved by the Secretary of State.

TGCA92\s196(1A) provides that a licence other than a UK licence relates to an "undeveloped area" at any time if no development has taken place in the licensed area and the appropriate regulatory authority has not issued a consent to develop or served on the company a notice specifying a programme of development.

"Development" has its PRT meaning at FA83\s36(4) and FA83\s36(5) for both UK and overseas licences and covers the carrying out, or erection, of permanent works to win or transport oil from the field, other than in the course of searching for oil or drilling works.

1. TCGA92\s196(4) modifies the general rule in (b) where the disposal gives the buyer "an interest in the licence only so far as it relates to part of the licensed area" (e.g. where the farmer-in acquires an interest in only one block of a multi-block licence). In that case, the "licensed area" is regarded as that part of the licensed area in which the buyer acquires an interest. If that part is undeveloped, within the meaning in (b), s194 will apply notwithstanding that another block covered by the licence has development consent.