OT30052 - Capital Gains: Undeveloped Areas - Licence Area
The exploration and appraisal work must be carried out in
- an area which is, or forms part of, the licensed area in relation to the licence disposed of (modified by TCGA92\S196(4) if appropriate).
The provision does not cover a case where the consideration given involves a work programme outside the licensed area for which the farmer-in will acquire an interest.
However TCGA92\S194(3) relaxes the rule in relation to certain composite transactions. If two or more licences, each relating to an undeveloped area are disposed of under a single transaction for a consideration consisting of, or including, a work programme obligation, then the licensed areas are looked at collectively. As long as the work is carried out in any of those areas the work programme obligation is deemed to have Nil value.