21(1)The following section shall be inserted in the Capital Allowances Act 1990 after section 118—
118ADisposals of oil licences relating to undeveloped areas
(1)If, at the time of the material disposal of a licence, the licence relates to an undeveloped area, then, to the extent that the consideration for the disposal consists of—
(a)another licence which at that time relates to an undeveloped area or an interest in another such licence, or
(b)an obligation to undertake exploration work or appraisal work in an area which is or forms part of the licensed area in relation to the licence disposed of,
the value of that consideration shall be treated as nil for the purposes of this Part and Part VII.
(2)For the purposes of this section “material disposal” means a disposal (including a part disposal) other than a disposal in relation to which sections 157 and 158 of this Act have effect.
(3)If a material disposal of a licence which, at the time of the disposal, relates to an undeveloped area is part of a larger transaction under which one party makes to another material disposals of two or more licences, each of which at the time of the disposal relates to an undeveloped area, the reference in subsection (1)(b) above to the licensed area in relation to the licence disposed of shall be construed as a reference to the totality of the licensed areas in relation to those two or more licences.
(4)Expressions used in this section and in section 194 of the Taxation of Chargeable Gains Act 1992 have the same meaning in this section as they have in that.
(2)In section 138 of that Act the following subsection shall be inserted after subsection (7)—
(7A)Where the relevant event is the material disposal of a licence for the purposes of section 118A, subsection (4) above shall have effect subject to that section.