7(1)An election under section 35(5) shall not cover disposals such as are specified in sub-paragraph (2) below.
(2)The disposals mentioned in sub-paragraph (1) above are disposals of, or of an interest in—
(a)plant or machinery,
(b)an asset which the person making the disposal has at any time held for the purposes of or in connection with—
(i)a trade consisting of the working of a source of mineral deposits, or
(ii)where a trade involves (but does not consist of) such working, the part of the trade which involves such working, or
(c)a licence under the [1934 c. 36.] Petroleum (Production) Act 1934 or the [1964 c. 28 (N.l.).] Petroleum (Production) Act (Northern Ireland) 1964; or
(d)shares which, on 31st March 1982, were unquoted and derived their value, or the greater part of their value, directly or indirectly from oil exploration or exploitation assets situated in the United Kingdom or a designated area or from such assets and oil exploration or exploitation rights taken together;
but a disposal does not fall within paragraph (a) or (b) above unless a capital allowance in respect of any expenditure attributable to the asset has been made to the person making the disposal or would have been made to him had he made a claim.
(3)For the purposes of sub-paragraph (2)(d) above,—
(a)“shares” includes stock and any security, as defined in section 254(1) of the Taxes Act; and
(b)shares (as so defined) were unquoted on 31st March 1982 if, on that date, they were neither quoted on a recognised stock exchange nor dealt in on the Unlisted Securities Market;
but nothing in this paragraph affects the operation, in relation to such unquoted shares, of sections 126 to 130.
(4)In sub-paragraph (2)(d) above—
“designated area” means an area designated by Order in Council under section 1(7) of the [1964 c. 29.] Continental Shelf Act 1964;
“oil exploration or exploitation assets” shall be construed in accordance with sub-paragraphs (5) and (6) below; and
“oil exploration or exploitation rights” means rights to assets to be produced by oil exploration or exploitation activities (as defined in sub-paragraph (6) below) or to interests in or to the benefit of such assets.
(5)For the purposes of sub-paragraph (2)(d) above an asset is an oil exploration or exploitation asset if either—
(a)it is not a mobile asset and is being or has at some time been used in connection with oil exploration or exploitation activities carried on in the United Kingdom or a designated area; or
(b)it is a mobile asset which has at some time been used in connection with oil exploration or exploitation activities so carried on and is dedicated to an oil field in which the company whose shares are disposed of by the disposal, or a person connected with that company, is or has been a participator;
and, subject to sub-paragraph (6) below, expressions used in paragraphs (a) and (b) above have the same meaning as if those paragraphs were included in Part I of the [1975 c. 22.] Oil Taxation Act 1975.
(6)In the preceding provisions of this paragraph “oil exploration or exploitation activities” means activities carried on in connection with—
(a)the exploration of land (including the seabed and subsoil) in the United Kingdom or a designated area, as defined in sub-paragraph (4) above, with a view to searching for or winning oil; or
(b)the exploitation of oil found in any such land;
and in this sub-paragraph “oil” has the same meaning as in Part I of the [1975 c. 22.] Oil Taxation Act 1975.
(7)Where the person making the disposal acquired the asset on a no gain/no loss disposal, the references in sub-paragraph (2) above to that person are references to the person making the disposal, the person who last acquired the asset otherwise than on a no gain/no loss disposal or any person who subsequently acquired the asset on such a disposal.
(8)In this paragraph—
(a)“source of mineral deposits” shall be construed in accordance with section 121 of the 1990 Act, and
(b)references to a no gain/no loss disposal shall be construed in accordance with paragraph 1 above.