Corporation Tax Act 2009

1251 Car or motor cycle hire U.K.

(1) Subsection (2) applies if, in calculating the total profits of a company with investment business, a deduction is allowed under section 1219 for expenses incurred on the hiring of a car or motor cycle—

(a) which is not a qualifying hire car or motor cycle, and

(b) the retail price of which when new exceeds £12,000.

(2) The amount of the deduction which would otherwise be allowable is reduced by multiplying the amount by the fraction—

where RP is the retail price of the car or motor cycle when new.

(3) Subsection (4) applies if a deduction for expenses is reduced as a result of subsection (2), or a corresponding provision, and—

(a) subsequently—

(i) there is a rebate (however described) of the hire charges, or

(ii) a debt in respect of any of the hire charges is released otherwise than as part of a statutory insolvency agreement, and

(b) a credit representing the rebate, or the amount released, reverses (in whole or in part) a debit representing the expenses.

(4) In applying subsection (2) of section 1230 (calculation of the reversal amount for the purposes of the claw back rules)—

(a) take the amount given by Step 1,

(b) multiply that amount by the fraction set out in subsection (2) above (instead of applying Step 2), and

(c) apply Step 3 to the amount given by paragraph (b).

(5) In this section “corresponding provision” means—

(a) section 56(2) (car or motor cycle hire: trade profits and property income),

(b) section 48(2) of ITTOIA 2005 (car or motor cycle hire: trade profits and property income), or

(c) section 76ZN(2) of ICTA (car or motor cycle hire: expenses of insurance companies).

(6) The power under section 74(4) of CAA 2001 to increase or further increase the sums of money specified in Chapter 8 of Part 2 of CAA 2001 includes the power to increase or further increase the sum of money specified in subsection (1)(b) or (2).

(7) Sections 57 (meaning of “car or motor cycle” and other expressions) and 58 (hiring cars with low CO₂ emissions before 1 April 2013) apply for the purposes of this section as they apply for the purposes of section 56.