OT30103 - Capital Gains

Drilling Expenditure. Prohibition of Double Deduction. Section 195(5)

To prevent a double deduction in computing the chargeable gain, TCGA92\s195(5) provides that an SRA recovery is treated as a balancing charge for the purposes of TCGA92\s37. The recovery is normally a trading receipt and without TCGA92\s37(2) would otherwise be deducted from the consideration as well as being allowed as enhancement expenditure.

Section 195(5) also treats the recovery as a balancing charge to be deducted under Section 41(6) TCGA from the capital allowances to be taken into account for the purpose of restricting losses under that section.