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Treatment of certain disposals.
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88.—(1) This section shall have effect where, on or after the 14th day of January, 1985, a person, with the consent of the Minister for Energy, makes a disposal of an interest in a licensed area (including the part disposal of such an interest or the exchange of an interest owned by him in one licensed area for an interest in another licensed area) and the disposal is shown to the satisfaction of the said Minister to have been made for the sole purpose of ensuring the proper exploration, delineation or development of any licensed area.
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(2) Where this section has effect as respects a disposal by a person (neither being nor including such an exchange as is referred to in subsection (1)) and the consideration received by him is, in the relevant period, wholly and exclusively applied (whether by him, or on his behalf by the person acquiring the asset disposed of) for the purposes of either or both of the following, that is to say:
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(a) petroleum exploration activities, and
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(b) searching for or winning access to petroleum in a relevant field,
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then, for the purposes of the Capital Gains Tax Acts, if the person making the disposal makes a claim in that behalf, the disposal shall not be treated as involving any disposal of an asset but the consideration shall not, as respects any subsequent disposal of any asset acquired or brought into being or enhanced in value by the application of that consideration, be deductible from the consideration for that subsequent disposal in the computation of the chargeable gain accruing on that disposal.
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(3) Where this section has effect as respects such an exchange as is referred to in subsection (1), then, for the purposes of the Capital Gains Tax Acts, if a person making such an exchange makes a claim in that behalf, the exchange shall not be treated as involving any disposal or acquisition by him of an asset but the asset given by him and the asset acquired by him in the exchange shall be treated as the same asset acquired as the asset given by him was acquired:
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Provided that—
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(a) if the person receives for the exchange any consideration in addition to the interest in the other licensed area, this subsection shall not have effect as respects the claim made by him unless the additional consideration is applied in the relevant period in the manner referred to in subsection (2) but, where that additional consideration is so applied and the person makes a claim that this subsection should have effect, it shall so have effect as if the asset given by him in exchange were such portion only of that asset as is equal in value to the interest in the other licensed area taken by him in the exchange and subsection (2) shall have effect as if the remaining portion of the asset so given by him were disposed of by him for that additional consideration, and
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(b) if the person gives for the exchange any consideration in addition to the interest in a licensed area given by him in the exchange, this subsection shall have effect as respects the claim made by him as if the interest in the other licensed area taken by him in the exchange were such portion only of that interest as is equal in value to the interest in the licensed area given by him in the exchange.
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(4) In this section “relevant period”, as respects a disposal, means the period beginning 12 months before and ending 3 years after the disposal, or such longer period as the Minister for Energy may, on the application of the person making the disposal, certify to be, in his opinion, reasonable having regard to the proper exploration, delineation or development of any licensed area.
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