Capital Allowances Act 1990 (repealed)

Chapter I U.K. Allowances and Charges: General Provisions

Modifications etc. (not altering text)

C2 Pt. II modified (19.9.1994) by Coal Industry Act 1994 (c. 21), s. 68(4), Sch. 4 para. 22; S.I. 1994/2189, art. 2, Sch.

C14 Pt. II Chapter I (ss. 22–29) modified (31.5.1991) by Environmental Protection Act 1990 (c.43), s. 32(6), Sch. 2 para. 9(2)

22 First-year allowances: transitional relief for regional projects. U.K.

(1) Subject to the provisions of this Part, where—

(a) a person carrying on a trade incurs capital expenditure to which this section applies on the provision of machinery or plant wholly and exclusively for the purposes of the trade, and

(b) in consequence of his incurring the expenditure, the machinery or plant belongs to him at some time during the chargeable period related to the incurring of the expenditure,

there shall be made to him for that period an allowance (“a first-year allowance") which[F1 , in the case of expenditure to which this section applies by virtue only of subsection (3B) [F2 or (3D)] below, shall be of an amount equal to 40 per cent. of that expenditure[F3 , in the case of expenditure to which this section applies by virtue only of subsection (3C) below, shall be of an amount equal to the percentage of that expenditure that is given by subsection (1AA) below] and, in any other case,] shall be of an amount equal to the whole of that expenditure.

[F4 (1AA) In the case of expenditure to which this section applies by virtue only of subsection (3C) below, the percentage mentioned in subsection (1) above is—

(a) in the case of expenditure to which Chapter IVA applies, 12 per cent; and

(b) in the case of any other expenditure, 50 per cent.]

F5 [(1A) Subsection (1B) below applies in any case where a person—

(a) has at any time incurred, as mentioned in paragraphs (a) and (b) of subsection (1) above, capital expenditure to which this section applies, and

(b) subsequently incurs an additional VAT liability in respect of that capital expenditure at a time when the machinery or plant is provided wholly and exclusively for the purposes of the trade.

(1B) Where this subsection applies, then, for the purposes of this Act—

(a) the additional VAT liability shall be regarded as capital expenditure incurred by the person on the provision of the machinery or plant wholly and exclusively for the purposes of the trade, and

(b) that capital expenditure shall be regarded as expenditure in consequence of the incurring of which the machinery or plant belongs, or has belonged, to him at some time during the chargeable period related to the incurring of the capital expenditure,

and, subject to the following provisions of this Act, a first-year allowance shall accordingly be made to him under subsection (1) above for the chargeable period related to the incurring of that liability.]

(2) This section applies to so much of any expenditure as is certified by the Secretary of State for the purposes of this section to be expenditure which, in his opinion, qualifies for a regional development grant or a grant under Part IV of the relevant Order and consists of the payment of sums on a project—

(a) either in an area which on 13th March 1984 was a development area, within the meaning of the M1 Industrial Development Act 1982, or in Northern Ireland; and

(b) in respect of which a written offer of financial assistance under section 7 or 8 of that Act was made on behalf of the Secretary of State in the period beginning on 1st April 1980 and ending on 13th March 1984 or in respect of which a written offer of financial assistance was made in that period by the Highlands and Islands Development Board.

(3) This section applies to so much of any expenditure as is certified by the Department of Economic Development in Northern Ireland for the purposes of this section to be expenditure which, in the opinion of that Department, qualifies for a grant under Part IV of the relevant Order and consists of the payment of sums on a project—

(a) in Northern Ireland; and

(b) in respect of which a written offer of financial assistance under Article 7 or 8 of the relevant Order was made on behalf of a Department of the Government of Northern Ireland in the period beginning on 1st April 1980 and ending on 13th March 1984 or in respect of which a written offer of financial assistance was made in that period by the Local Enterprise Development Unit.

F6 [(3A) This section also applies to any additional VAT liability incurred in respect of expenditure certified under subsection (2) or (3) above.]

F7 [(3B) This section applies to—

(a) any expenditure which, disregarding any effect of section 83(2) on the time at which it is to be treated as incurred, is incurred by any person in the period beginning with 1st November 1992 and ending with 31st October 1993; and

(b) any additional VAT liability incurred in respect of expenditure to which this section applies by virtue of paragraph (a) above.]

[F8 (3C) This section applies to—

(a) any expenditure which, disregarding any effect of section 83(2) on the time at which it is to be treated as incurred, is incurred by [F9 a small or medium-sized enterprise] in the period beginning with 2nd July 1997 and ending with 1st July 1998; and

(b) any additional VAT liability incurred in respect of expenditure to which this section applies by virtue of paragraph (a) above.]

[F10 (3CA) Subject to the provisions of this Part, this section applies to—

(a) any expenditure incurred in the special relief period by [F11 a small or medium-sized enterprise] on the provision of machinery or plant for use primarily in Northern Ireland; and

(b) any additional VAT liability incurred in respect of expenditure to which this section applies by virtue of paragraph (a) above.

(3CB) For the purposes of subsection (3CA) above expenditure is incurred in the special relief period if, disregarding any effect of section 83(2) on the time at which it is to be treated as incurred, it is incurred in the period beginning with 12th May 1998 and ending with 11th May 2002.

(3CC) Expenditure is not expenditure to which this section applies by virtue of subsection (3CA) above in so far as it is—

(a) expenditure to which Chapter IVA applies; or

(b) expenditure on the provision of an aircraft or hovercraft[F12 ; or

(c) expenditure on the provision of a goods vehicle for the purposes of a trade which consists primarily of the conveyance of goods; or

(d) unauthorised expenditure on the provision of machinery or plant for use primarily in—

(i) agriculture, fishing or fish farming, or

(ii) any relevant activity carried out in relation to agricultural produce, fish or any fish product for the purpose of bringing it to market].]

[F13 (3CD) For the purposes of subsection (3CC) above—

(a) expenditure is unauthorised expenditure unless it is authorised, for the purposes of subsection (3CA) above, by the Department of Agriculture for Northern Ireland; and

(b) “relevant activity” means transportation, storage, preparation, processing or packaging.

(3CE) An authorisation given, for the purposes of subsection (3CA) above, by the Department of Agriculture for Northern Ireland—

(a) may be given either specially (that is to say, so as to apply only to a specified item of expenditure or a specified person) or generally (that is to say, so as not only so to apply);

(b) may, if given generally, be modified by that Department; and

(c) may in any case be absolute or conditional.]

[F14 (3D) This section applies to the following expenditure except in so far as it is expenditure to which Chapter IVA applies, that is to say—

(a) any expenditure which, disregarding any effect of section 83(2) on the time at which it is to be treated as incurred, is incurred by [F15 a small or medium-sized enterprise] [F16 on or after 2nd July 1998]; and

(b) any additional VAT liability incurred in respect of expenditure to which this section applies by virtue of paragraph (a) above.]

[F17 (3E) This section applies to—

(a) any expenditure on information and communications technology which, disregarding any effect of section 83(2) on the time at which it is to be treated as incurred, is incurred by a small enterprise in the period beginning with 1st April 2000 and ending with 31st March 2003; and

(b) any additional VAT liability incurred in respect of expenditure to which this section applies by virtue of paragraph (a) above.

(3F) For the purposes of subsection (3E) above expenditure on information and communications technology means expenditure on items within any of the classes set out in subsection (3G) below.

(3G) The classes referred to in subsection (3F) above are as follows:

• A. Computers and associated equipment

  This class covers—

  (a)

  computers,

  (b)

  peripheral devices designed to be used by being connected to or inserted in a computer,

  (c)

  equipment (including cabling) for use primarily to provide a data connection—

  (i)

  between one computer and another, or

  (ii)

  between a computer and a data communications network,

  (d)

  dedicated electrical systems for computers.

  For this purpose “computer" does not include computerised control or management systems or other systems that are part of a larger system whose principal function is not processing or storing information.

• B. Other qualifying equipment

  This class covers—

  (a)

  wireless application protocol telephones,

  (b)

  third generation mobile telephones,

  (c)

  devices designed to be used by being connected to a television set that are capable of receiving and transmitting information from and to data networks, and

  (d)

  other devices substantially similar to those within paragraphs (a), (b) and (c) that are capable of receiving and transmitting information from and to data networks.

  This is subject to any order under subsection (3H) below.

• C. Software

  This class covers the right to use or otherwise deal with software for the purposes of any equipment within Class A or B above.

(3H) The Treasury may make provision by order—

(a) further defining the descriptions of equipment within Class B in subsection (3G), or

(b) adding further descriptions of equipment to that class.]

(4) Subject to the following provisions of this section, no first-year allowance shall be made in respect of any expenditure [F18 to which this section applies otherwise than by virtue only of [F19 one or more of subsections (3C), (3CA)[F20 , (3D) and (3E)]] above]—

(a) if the chargeable period related to the incurring of the expenditure is also the chargeable period related to the permanent discontinuance of the trade; or

(b) incurred on the provision of a motor car; or

(c) subject to subsections (5), (6) [F21 (6A)]and (11) below, on the provision of machinery or plant for leasing, whether in the course of a trade or otherwise, unless it appears that the machinery or plant will be used for a qualifying purpose in the requisite period and will not at any time in that period be used for any other purpose;

and section 50 shall apply for the interpretation of paragraph (c) above as it applies for the interpretation of Chapter V of this Part.

(5) Paragraph (c) of subsection (4) above does not apply to expenditure incurred at any time on the provision of machinery or plant which is to be an integral part of a building or structure if section 1 would apply to expenditure incurred at that time on the construction of that building or structure.

(6) Nothing in paragraph (c) of subsection (4) above affects expenditure on the provision of vehicles if they are provided wholly or mainly for the use of persons in receipt of—

(a) [F22 a disability living allowance under the [F23 Social Security Contributions and Benefits Act 1992][F24 or the [F25 Social Security Contributions and Benefits (Northern Ireland) Act 1992]] by virtue of entitlement to the mobility component]. . .; or

(b) a mobility supplement under a scheme made under the M2 Personal Injuries (Emergency Provisions) Act 1939; or

(c) a mobility supplement under an Order in Council made under section 12 of the M3 Social Security (Miscellaneous Provisions) Act 1977; or

(d) any payment appearing to the Treasury to be of a similar kind and specified by them by order.

F26 [(6A) Paragraph (c) of subsection (4) above does not apply to expenditure to which this section applies by virtue only of subsection (3B) above; but (subject to section 43) no first-year allowance shall be made by virtue of subsection (3B) above in respect of any expenditure on the provision of machinery or plant for leasing if—

(a) it appears that the expenditure is such that section 42 would have effect with respect to it; or

(b) each of the following conditions is satisfied, that is to say—

(i) the expenditure is incurred on or after 14th April 1993;

(ii) the expenditure is expenditure in respect of which paragraph (c) of subsection (4) above would, if it applied, prevent the making of any first year allowance; and

(iii) the person to whom the machinery or plant is to be or is leased, or a person who (within the meaning of section 839 of the principal Act) is connected with that person, used the machinery or plant for any purpose at any time before its provision for leasing.]

[F27 (6B) No first-year allowance shall be made in respect of any expenditure to which this section applies by virtue only of [F28 one or more of subsections (3C), (3CA)[F20 , (3D) and (3E)]] above—

(a) if the chargeable period related to the incurring of the expenditure is also the chargeable period related to the permanent discontinuance of the trade;

(b) if the expenditure (whether or not it is expenditure to which Chapter IVA would apply but for the provisions of section 38B) is expenditure of the kind described in any of subsections (2) to (4) of section 38B;

(c) if the expenditure is expenditure to which Chapter IVA would apply but for the provisions of section 38H; or

(d) if the expenditure is expenditure on the provision of machinery or plant for leasing, whether in the course of a trade or otherwise;

and section 50(2) shall apply for the interpretation of paragraph (d) above as it applies for the interpretation of Chapter V of this Part.

(6C) No first-year allowance shall be made in respect of any expenditure incurred on the provision of machinery or plant to which this section applies by virtue only of [F29 one or more of subsections (3C), (3CA)[F20 , (3D) and (3E)]] above if—

(a) the provision of the machinery or plant is connected with a change in the nature or conduct of a trade or business carried on by a person other than the person incurring the expenditure; and

(b) the obtaining of a first-year allowance is the main benefit, or one of the main benefits, which could reasonably be expected to arise from the making of the change.]

[F30 (6D) Expenditure incurred on the provision of machinery or plant shall not be taken to be expenditure to which this section applies by virtue of subsection (3CA) above if—

(a) at the time when the expenditure is incurred, the person incurring it intends the machinery or plant to be used partly outside Northern Ireland; and

(b) the main benefit, or one of the main benefits, which could reasonably be expected to arise from the relevant arrangements is the obtaining of a first-year allowance, or a greater first-year allowance, in respect of the part of the expenditure that is attributable to the intended outside use.

(6E) In subsection (6D) above—

(a) “the relevant arrangements” means the transaction under which the expenditure is incurred and any scheme or arrangements of which that transaction forms part;

(b) “the intended outside use” means so much of the use of the machinery or plant as (at the time mentioned in paragraph (a) of that subsection) the person intends will be use outside Northern Ireland; and

(c) the reference to the part of the expenditure that is attributable to that use is a reference to so much of the expenditure in question as is so attributable on a just and reasonable basis.]

[F31 (7) A claim for one or more first-year allowances to be made for any chargeable period may require that the amount of the allowance, or aggregate amount of the allowances, be reduced to an amount specified in that behalf in the claim.]

(8) No F32 ... claim under subsection (7) above may be made in respect of any ship.

F33 (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(10) In this section—

• [F34 “agriculture” and “agricultural produce” have the same meanings as in section 6 of the European Communities Act 1972;]

• [F34 “fish” includes shellfish;]

• [F34 “fish farming” means the intensive rearing, on a commercial basis, of fish intended for human consumption;]

• [F34 “fishing” means a trade, or part of a trade, which consists of the catching or taking of fish;]

• [F34 “goods vehicle” has the same meaning as in the Road Traffic (Northern Ireland) Order 1995;]

• [F35 “hovercraft” has the same meaning as in the Hovercraft Act 1968.]

• “regional development grant” means a grant under Part II of the M4 Industrial Development Act 1982;

• “the relevant Order” means the M5 Industrial Development (Northern Ireland) Order 1982;

and any reference to a particular provision of that Act or Order includes a reference to the corresponding provision of any Act or Order which was in force before and repealed by the Industrial Development Act 1982 or the Industrial Development (Northern Ireland) Order 1982.

(11) Where expenditure is incurred on the provision of machinery or plant which is fixed to a building or land of which the person who incurs the expenditure is the lessor and the circumstances are such that a transfer of his interest in the building or land would operate to transfer his interest in the machinery or plant, then subsection (4)(c) above shall not preclude the making of a first-year allowance in respect of such expenditure.

Textual Amendments

F1 Words in s. 22(1) inserted (27.7.1993 with effect as mentioned in s. 115(5) of the amending Act) by 1993 c. 34, s. 115(1)(5)

F2 Words in s. 22(1) inserted (with effect in accordance with s. 84(3) of the amending Act) by Finance Act 1998 (c. 36), s. 84(1)

F3 Words in s. 22(1) inserted (with effect in accordance with s. 42(9) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 42(1)

F4 S. 22(1AA) inserted (with effect in accordance with s. 42(9) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 42(2)

F5 S. 22(1A)(1B) inserted (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), s. 59, Sch. 14 Pt. II para. 6(1).

F6 S. 22(3A) inserted (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), s. 59, Sch. 14 Pt. II para. 6(2).

F7 S. 22(3B) inserted (27.7.1993 with effect as mentioned in s. 115(5) of the amending Act) by 1993 c. 34, s. 115(2)(5)

F8 S. 22(3C) inserted (with effect in accordance with s. 42(9) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 42(3)

F9 Words in s. 22(3C)(a) substituted (28.7.2000) by Finance Act 2000 (c. 17), s. 70(2)(a)

F10 S. 22(3CA)-(3CC) inserted (with effect in accordance with s. 83(6)(7) of the amending Act) by Finance Act 1998 (c. 36), s. 83(1); S.I. 1999/2119, art. 2

F11 Words in s. 22(3CA)(a) substituted (28.7.2000) by Finance Act 2000 (c. 17), s. 70(2)(a)

F12 S. 22(3CC)(c)(d) and preceding word inserted (with effect in accordance with s. 78(6) of the amending Act) by Finance Act 1999 (c. 16), s. 78(1)

F13 S. 22(3CD)(3CE) inserted (with effect in accordance with s. 78(6) of the amending Act) by Finance Act 1999 (c. 16), s. 78(2)

F14 S. 22(3D) inserted (with effect in accordance with s. 84(3) of the amending Act) by Finance Act 1998 (c. 36), s. 84(2)

F15 Words in s. 22(3D)(a) substituted (28.7.2000) by Finance Act 2000 (c. 17), s. 70(2)(a)

F16 Words in s. 22(3D) substituted (28.7.2000) by Finance Act 2000 (c. 17), s. 70(1)

F17 S. 22(3E)-(3H) inserted (28.7.2000) by Finance Act 2000 (c. 17), s. 71(1)

F18 Words in s. 22(4) inserted (with effect in accordance with s. 42(9) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 42(4)

F19 Words in s. 22(4) substituted (with effect in accordance with s. 85(9) of the amending Act) by Finance Act 1998 (c. 36), s. 85(1)

F20 Words in s. 22(4)(6B)(6C) substituted (28.7.2000) by Finance Act 2000 (c. 17), s. 71(2)

F21 Words in s. 22(4)(c) inserted (27.7.1993 with effect as mentioned in s. 115(5) of the amending Act) by 1993 c. 34, s. 115(3)(5)

F22 Words in s. 22(6)(a) substituted (6.4.1992) by Disability Living Allowance and Disability Working Allowance Act 1991 (c. 21), s. 4, Sch. 2, para. 20; S.I. 1991/2617, art. 2(f)

F23 Words in s. 22(6)(a) substituted (1.7.1992) by Social Security (Consequential Provisions) Act 1992 (c. 6), ss. 4, 7(2), Sch. 2 para. 109(a)

F24 Words in s. 22(6)(a) inserted (6.4.1992) by S.I.1991/2874, art. 6(2)(a); S.R. 1992/94, art. 2.

F25 Words in s. 22(6)(a) substituted (1.7.1992) by Social Security (Consequential Provisions)(Northern Ireland) Act 1992 (c. 9), ss. 4, 7(2), Sch. 2 para. 38(a).

F26 S. 22(6A) inserted (27.7.1993 with effect as mentioned in s. 115(5) of the amending Act) by 1993 c. 34, s. 113(3)(5)

F27 S. 22(6B)(6C) inserted (with effect in accordance with s. 42(9) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 42(5)

F28 Words in s. 22(6B) substituted (with effect in accordance with s. 85(9) of the amending Act) by Finance Act 1998 (c. 36), s. 85(1)

F29 Words in s. 22(6C) substituted (with effect in accordance with s. 85(9) of the amending Act) by Finance Act 1998 (c. 36), s. 85(1)

F30 S. 22(6D)(6E) inserted (with effect in accordance with s. 83(6) of the amending Act) by Finance Act 1998 (c. 36), s. 83(2)

F31 S. 22(7) substituted by Finance Act 1990 (c. 29), s. 103, Sch. 17 para. 3(2)

F32 Words in s. 22(8) repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 3(3), Sch. 19 Pt. V, Note 6

F33 S. 22(9) repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 3(4), Sch. 19 Pt. V, Note 6

F34 Words in s. 22(10) inserted (with effect in accordance with s. 78(6) of the amending Act) by Finance Act 1999 (c. 16), s. 78(3)

F35 Words in s. 22(10) inserted (with effect in accordance with s. 83(6) of the amending Act) by Finance Act 1998 (c. 36), s. 83(3)

Modifications etc. (not altering text)

C15 S. 22 restricted (3.5.1994) by Finance Act 1994 (c. 9), s. 118(1)(a)

Marginal Citations

M1 1982 c. 52.

M2 1939 c. 82.

M3 1977 c. 5.

M4 1982 c. 52.

M5 S.I. 1982/1083 (N.I.15).

[F36 22A Expenditure of a [F37 small or medium-sized enterprise]. U.K.

(1) For the purposes of section 22 capital expenditure incurred by a company is capital expenditure incurred by a [F38 small or medium-sized enterprise] if the company—

(a) qualifies as small or medium-sized in relation to the financial year of the company in which the expenditure is incurred; and

(b) is not a member of a large group at the time when the expenditure is incurred.

(2) For the purposes of section 22, capital expenditure is capital expenditure incurred by a [F39 small or medium-sized enterprise] if—

(a) it is incurred by a business for the purposes of a trade (the “first trade”) carried on by that business; and

(b) were the first trade carried on by a company (the “hypothetical company”) in the circumstances set out in subsection (3) below, that company would qualify as small or medium-sized in relation to the financial year of that company in which the expenditure would be treated as incurred.

(3) Those circumstances are—

(a) that every trade, profession or vocation carried on by the business concerned is carried on by the business as a part of the first trade;

(b) that the financial years of the hypothetical company coincide with the chargeable periods of the business concerned; and

(c) that accounts of the hypothetical company for any relevant chargeable period were prepared in accordance with the requirements of the Companies Act 1985 as if that period were a financial year of the company.

(4) Subject to subsection (5) below, a company is a member of a large group at the time when any expenditure is incurred if —

(a) it is at that time the [F40 parent undertaking] of a group which does not qualify as small or medium-sized in relation to the financial year of the [F40 parent undertaking] in which that time falls; or

(b) it is at that time a subsidiary undertaking in relation to the [F40 parent undertaking] of such a group.

(5) If, at the time when any expenditure is incurred by any company any arrangements exist which are such that, had effect been given to them immediately before that time, the company or a successor of the company would, at that time, have been a member of a large group, this section shall have effect as if the company concerned was a member of a large group at that time.

(6) In this section—

• “arrangements” means arrangements of any kind, whether in writing or not, including arrangements that are not legally enforceable;

• “business” means—

  (a)

  an individual;

  (b)

  a partnership of which all the members are individuals;

  (c)

  a registered friendly society within the meaning of Chapter II of Part XII of the principal Act; or

  (d)

  a body corporate which is not a company but is within the charge to corporation tax;

• “company” means—

  (a)

  a company, or an oversea company, within the meaning of the Companies Act 1985; or

  (b)

  a company, or a Part XXIII company, within the meaning of the Companies (Northern Ireland) Order 1986;

• “financial year”, “group”, [F41 “parent undertaking”] and “subsidiary undertaking”—

  (a)

  except in relation to a company formed and registered in Northern Ireland, have the same meanings as in Part VII of the Companies Act 1985; and

  (b)

  in relation to a company so formed and registered, have the same meanings as in Part VIII of the Companies (Northern Ireland) Order 1986.

(7) References in this section, in relation to a company, to its qualifying as small or medium-sized—

(a) except in the case of a company formed and registered in Northern Ireland, are references to its so qualifying, or being treated as so qualifying, for the purposes of section 247 of the Companies Act 1985; and

(b) in the case of a company so formed and registered, are references to its so qualifying, or being treated as so qualifying, for the purposes of Article 255 of the Companies (Northern Ireland) Order 1986.

(8) In relation to a company with respect to which the question arises whether it is or would be a member of a large group, references to a group’s qualifying as small or medium-sized—

(a) except in the case of a company formed and registered in Northern Ireland, are references to its so qualifying, or being treated as so qualifying, for the purposes of section 249 of the Companies Act 1985; and

(b) in the case of a company so formed and registered, are references to its so qualifying, or being treated as so qualifying, for the purposes of Article 257 of the Companies (Northern Ireland) Order 1986;

[F42 but for the purposes of this section each of those provisions shall be construed as if references, in relation to a group, to the parent company were references to the parent undertaking].

(9) For the purposes of this section a company is the successor of another if—

(a) it carries on a trade which, in whole or in part, the other company has ceased to carry on; and

(b) the circumstances are such that section 343 of the principal Act applies in relation to the two companies as the predecessor and the successor within the meaning of that section.]

Textual Amendments

F36 S. 22A inserted (with effect in accordance with s. 43(2) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 43(1)

F37 Words in s. 22A heading substituted (28.7.2000) by Finance Act 2000 (c. 17), s. 70(2)(b)(i)

F38 Words in s. 22A(1) substituted (28.7.2000) by Finance Act 2000 (c. 17), s. 70(2)(b)(ii)

F39 Words in s. 22A(2) substituted (28.7.2000) by Finance Act 2000 (c. 17), s. 70(2)(b)(iii)

F40 Words in s. 22A(4) substituted (with effect in accordance with s. 85(10)(11) of the amending Act) by Finance Act 1998 (c. 36), s. 85(2)(a)

F41 Words in s. 22A(6) substituted (with effect in accordance with s. 85(10)(11) of the amending Act) by Finance Act 1998 (c. 36), s. 85(2)(b)

F42 Words in s. 22A(8) inserted (with effect in accordance with s. 85(10)(11) of the amending Act) by Finance Act 1998 (c. 36), s. 85(3)

[F43 22AA Expenditure of a small enterprise. U.K.

(1) For the purposes of section 22 capital expenditure incurred by a company is capital expenditure incurred by a small enterprise if the company—

(a) qualifies as small in relation to the financial year of the company in which the expenditure is incurred, and

(b) is not a member of a large or medium-sized group at the time when the expenditure is incurred.

(2) For the purposes of section 22, capital expenditure is capital expenditure incurred by a small enterprise if—

(a) it is incurred by a business for the purposes of a trade (the “first trade”) carried on by that business, and

(b) were the first trade carried on by a company (the “hypothetical company”) in the circumstances set out in subsection (3) below, that company would qualify as small in relation to the financial year of that company in which the expenditure would be treated as incurred.

(3) Those circumstances are—

(a) that every trade, profession or vocation carried on by the business concerned is carried on by the business as a part of the first trade,

(b) that the financial years of the hypothetical company coincide with the chargeable periods of the business concerned, and

(c) that accounts of the hypothetical company for any relevant chargeable period were prepared in accordance with the requirements of the Companies Act 1985 as if that period were a financial year of the company.

(4) Subject to subsection (5) below, a company is a member of a large or medium-sized group at the time when any expenditure is incurred if —

(a) it is at that time the parent undertaking of a group which does not qualify as small in relation to the financial year of the parent company in which that time falls; or

(b) it is at that time a subsidiary undertaking in relation to the parent undertaking of such a group.

(5) If, at the time when any expenditure is incurred by any company any arrangements exist which are such that, had effect been given to them immediately before that time, the company or a successor of the company would, at that time, have been a member of a large or medium-sized group, this section shall have effect as if the company concerned was a member of a large or medium-sized group at that time.

(6) In this section the following expressions have the same meaning as in section 22A above: “arrangements”, “business”, “company”, “financial year”, “group”, “parent undertaking” and “subsidiary undertaking”.

(7) References in this section, in relation to a company, to its qualifying as small—

(a) except in the case of a company formed and registered in Northern Ireland, are references to its so qualifying, or being treated as so qualifying, for the purposes of section 247 of the Companies Act 1985; and

(b) in the case of a company so formed and registered, are references to a company so qualifying, or being treated as so qualifying, for the purposes of Article 255 of the Companies (Northern Ireland) Order 1986.

(8) In relation to a company with respect to which the question arises whether it is or would be a member of a large or medium-sized group, references to a group’s qualifying as small—

(a) except in the case of a company formed and registered in Northern Ireland, are references to its so qualifying, or being treated as so qualifying, for the purposes of section 249 of the Companies Act 1985; and

(b) in the case of a company so formed and registered, are references to its so qualifying, or being treated as so qualifying, for the purposes of Article 257 of the Companies (Northern Ireland) Order 1986;

but for the purposes of this section each of those provisions shall be construed as if references, in relation to a group, to the parent company were references to the parent undertaking.

(9) For the purposes of this section a company is the successor of another if—

(a) it carries on a trade which, in whole or in part, the other company has ceased to carry on, and

(b) the circumstances are such that section 343 of the principal Act applies in relation to the two companies as the predecessor and the successor within the meaning of that section.]

Textual Amendments

F43 S. 22AA inserted (28.7.2000) by Finance Act 2000 (c. 17), s. 72

[F44 22B Withdrawal of first-year allowance on change of use. U.K.

(1) Where (but for this section) section 22 would apply to any expenditure by virtue of subsection (3CA) of that section, that section shall be deemed never to have so applied to that expenditure if, at any relevant time—

(a) the primary use to which the machinery or plant is put is a use outside Northern Ireland; or

(b) the machinery or plant is held for use otherwise than primarily in Northern Ireland.

(2) In subsection (1) above “a relevant time”, in relation to any expenditure, means a time which—

(a) falls in [F45 the relevant period]; and

(b) is a time when the machinery or plant belongs to the person who incurred the expenditure or to a person who (within the terms of section 839 of the principal Act) is, or at any time in that period has been, connected with the person who incurred the expenditure.

[F46 (2A) In subsection (2) above “the relevant period” means—

(a) where the expenditure concerned exceeds £3.5 million, the period of five years beginning with the date of the incurring of that expenditure, and

(b) in any other case, the period of two years beginning with that date.]

(3) All such assessments and adjustments of assessments shall be made as may be necessary in consequence of this section.

(4) Where a person who has made a return becomes aware that anything contained in that return has, after the making of the return, become incorrect by reason of the operation of this section, he shall, within three months of first becoming so aware, give notice to an officer of the Board of the amendments that are necessitated in his return in the light of the matter of which he has become aware.]

Textual Amendments

F44 S. 22B inserted (with effect in accordance with s. 83(6) of the amending Act) by Finance Act 1998 (c. 36), s. 83(4)

F45 Words in s. 22B(2)(a) substituted (with effect in accordance with s. 78(6) of the amending Act) by Finance Act 1999 (c. 16), s. 78(4)(a)

F46 S. 22B(2A) inserted (with effect in accordance with s. 78(6) of the amending Act) by Finance Act 1999 (c. 16), s. 78(4)(b)

Modifications etc. (not altering text)

C16 S. 22B modified by 1993 c. 34, s. 93(5) (as substituted (with effect in accordance with s. 105(3)-(5) of the amending Act) by Finance Act 2000 (c. 17), s. 105(1))

[F47 22C Disclosure of information in connection with first-year allowances. U.K.

(1) No obligation as to secrecy or other restriction on the disclosure of information imposed by statute or otherwise shall prevent—

(a) the Board or an authorised officer of the Board from disclosing to the Department of Agriculture for Northern Ireland (“the Department”) or an authorised officer of the Department, or

(b) the Department or an authorised officer of the Department from disclosing to the Board or an authorised officer of the Board,

information for the purpose of assisting the Board in the carrying out of their functions with respect to claims for capital allowances made under section 22 by virtue of subsection (3CA) of that section or, as the case may be, the Department in the carrying out of its functions under that section.

(2) Information obtained by virtue of a disclosure authorised by this section shall not be disclosed except—

(a) to the Board or the Department or to an authorised officer of the Board or of the Department; or

(b) for the purposes of any proceedings connected with a matter in relation to which the Board or the Department carry out the functions mentioned in subsection (1) above.]

Textual Amendments

F47 S. 22C inserted (with effect in accordance with s. 78(6) of the amending Act) by Finance Act 1999 (c. 16), s. 78(5)

23 Information relating to first-year allowances. U.K.

(1) A claim F48 ... for a first-year allowance in respect of expenditure to which section 22(4)(c) applies F48 ... shall be accompanied by a certificate—

(a) stating that the machinery or plant in question will be used for a qualifying purpose in the requisite period, will not be used for any other purpose and has not been used for any other purpose in any part of that period which has already elapsed; and

(b) containing a description of the machinery or plant in question or, if the claim F49 ... relates to more than one item of machinery or plant and those items are of different kinds, a description of the different kinds and the amount claimed or deducted in respect of each of them; and

(c) where the claim F49 ... relates to a first-year allowance which by virtue of section 45(2) is in respect of part only of any expenditure, containing a statement of the extent to which the [F50 profits] referred to in section 45(2) will be chargeable to tax as there mentioned.

(2) Where a person F51 ... has claimed a first-year allowance in respect of any expenditure F51 ... and the machinery or plant in question is at any time in the requisite period used otherwise than for a qualifying purpose, the person to whom it then belongs shall give notice of that fact to the inspector, specifying the use to which the machinery or plant has been put; and, subject to subsection (3) below, any such notice shall—

(a) be given within three months after the end of the chargeable period F52 ... in which the machinery or plant is first used otherwise than for a qualifying purpose; and

(b) relate to all the items of machinery or plant (if more than one) in respect of which that person is required to give notice under this subsection in respect of that period.

In this subsection the reference to machinery or plant being used otherwise than for a qualifying purpose shall include a reference to machinery or plant being treated as so used by virtue of section 45(4).

(3) If, at the end of the three months mentioned in subsection (2)(a) above, the person concerned does not know and cannot reasonably be expected to know that any item of machinery or plant in respect of which he is required to give a notice under that subsection has been used otherwise than for a qualifying purpose, he shall in respect of that item give the notice within 30 days of his coming to know that it has been so used.

(4) Where a first-year allowance has been made in respect of any expenditure, the inspector may by notice require—

(a) any person to whom the machinery or plant belongs or has belonged, or who is or has been in possession of it under a lease, during the requisite period; and

(b) the personal representatives of any such person,

to furnish him, within such period (not being less than 30 days) as may be specified in the notice, with such information as he may require and the person to whom the notice is addressed has or can reasonably obtain about the leasing of the machinery or plant or the use to which it is being or has been put.

(5) The obligation to give notice by virtue of subsection (2) or (3) above where the machinery or plant becomes used otherwise than for a qualifying purpose shall arise a second time when the machinery or plant becomes used—

(a) otherwise than for a qualifying purpose, and

(b) for the purpose of being leased to such a person as is referred to in section 42(1)(a) and (b),

(if it were not so used before).

(6) Section 50 shall apply for the interpretation of this section as it applies for the interpretation of Chapter V of this Part [F53 and references in this section to a first-year allowance shall not include references to a first-year allowance in respect of expenditure to which section 22 applies by virtue only of [F54 one or more of subsections (3B), (3C), (3CA)[F55 , (3D) and (3E)]] of that section.]

Textual Amendments

F48 Words repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 4(2), Sch. 19 Pt. V, Note 6

F49 Words repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 4(2), Sch. 19 Pt. V, Note 6

F50 Word in s. 23(1)(c) substituted (31.7.1998) by Finance Act 1998 (c. 36), s. 46(3)(a), Sch. 7 para. 4

F51 Words repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 4(3), Sch. 19 Pt. V, Note 6

F52 Words in Act repealed (with effect in accordance with s. 211(2) of the amending Act) by Finance Act 1994 (c. 9), s. 213(1), Sch. 26 Pt. 5(24)

F53 Words in s. 23(6) inserted (27.7.1993 with effect as mentioned in s. 115(5) of the amending Act) by 1993 c. 34, s. 115, Sch. 13 para.2

F54 Words in s. 23(6) substituted (with effect in accordance with s. 85(9) of the amending Act) by Finance Act 1998 (c. 36), s. 85(4)

F55 Words in s. 23(6) substituted (28.7.2000) by Finance Act 2000 (c. 17), s. 71(2)

24 Writing-down allowances and balancing adjustments. U.K.

(1) Subject to the provisions of this Part, where—

(a) a person carrying on a trade has incurred capital expenditure on the provision of machinery or plant wholly and exclusively for the purposes of the trade, and

(b) in consequence of his incurring that expenditure, the machinery or plant belongs or has belonged to him,

allowances and charges shall be made to and on him in accordance with the following provisions of this section.

F56 [(1A) If, in a case where the circumstances are as mentioned in paragraphs (a) and (b) of subsection (1) above, the person there mentioned incurs an additional VAT liability in respect of the capital expenditure at a time when the machinery or plant is provided wholly and exclusively for the purposes of the trade, then, for the purposes of this Act—

(a) that liability shall be regarded as capital expenditure incurred by him on the provision of the machinery or plant wholly and exclusively for the purposes of the trade, and

(b) that capital expenditure shall be regarded as expenditure in consequence of the incurring of which the machinery or plant belongs, or has belonged, to him,

and, subject to the following provisions of this Act, subsection (1) above shall have effect accordingly in relation to the capital expenditure constituted by that liability.]

(2) Subject to subsection (3) below, for any chargeable period for which a person within subsection (1) above has qualifying expenditure which exceeds any disposal value to be brought into account in accordance with subsection (6) below, there shall be made to him —

(a) unless the period is the chargeable period related to the permanent discontinuance of the trade, an allowance (“a writing-down allowance") equal to—

(i) 25 per cent. of the excess, or

[F57 (ii) a proportionately reduced or, as the case may require, increased percentage of the excess if the period is a period of less or more than a year, or the trade has been carried on for part only of the period;]

(b) if the period is the chargeable period related to the permanent discontinuance of the trade, an allowance (“a balancing allowance") equal to the whole of the excess.

(3) A claim for a writing-down allowance to be made for any chargeable period F58 ... may require that the amount of the allowance be reduced to an amount specified in that behalf in the claim.

F59 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) For any chargeable period for which a person’s qualifying expenditure is less than the disposal value which he is to bring into account, there shall be made on him a charge (“a balancing charge"), and the amount on which the charge is made shall be an amount equal to the difference.

(6) [F60 Subject to [F61 subsections (6A) and (7)] below,] the disposal value to be brought into account by a person for any chargeable period is the disposal value of all machinery or plant—

(a) on the provision of which for the purposes of the trade he has incurred capital expenditure; and

(b) which belongs to him at some time in the chargeable period F52 ... ; and

(c) F52 in respect of which, in the chargeable period ... , one of the following events occurs, namely—

(i) the machinery or plant ceases to belong to him;

(ii) he loses possession of the machinery or plant in circumstances where it is reasonable to assume that the loss is permanent or, in the case of machinery or plant which was in use for mineral exploration and access, he abandons the machinery or plant at the site where it was in use for that purpose;

(iii) the machinery or plant ceases to exist as such (as a result of destruction, dismantling or otherwise);

(iv) the machinery or plant begins to be used wholly or partly for purposes which are other than those of the trade;

(v) the trade is permanently discontinued (or is treated by virtue of any provision of the Tax Acts as permanently discontinued);

and that is the first such event to occur;

but this subsection shall not require a person to bring into account the disposal value of any machinery or plant which he disposes of by way of gift in such circumstances that there is a charge to tax under Schedule E.

[F62 (6A) In the case of machinery or plant consisting of computer software or the right to use or otherwise deal with computer software, the disposal value to be brought into account by a person for any chargeable period by virtue of subsection (6) above shall also include the disposal value of all such machinery or plant—

(a) on the provision of which for the purposes of the trade he has incurred capital expenditure;

(b) which belongs to him at some time in the chargeable period F52 ... ;

(c) in respect of which, in the chargeable period F52 ... , the following event occurs, namely, he grants to another person a right to use or otherwise deal with the whole or part of the computer software concerned in circumstances where the consideration in money for the grant constitutes (or if there were consideration in money for the grant would constitute) a capital sum; and

(d) in respect of which, whilst the machinery or plant belongs or belonged to him, no event falling within paragraph (iv) or (v) of subsection (6)(c) above has occurred before the event referred to in paragraph (c) above.]

[F63 (7) This subsection applies to all machinery and plant—

(a) on the provision of which for the purposes of the trade a person has incurred capital expenditure;

(b) which belongs to him at some time in a chargeable period F52 ... ; and

(c) in respect of which the following event occurs, namely, the making of an additional VAT rebate to him in that chargeable period F52 ... in respect of the capital expenditure incurred by him on the provision of the machinery or plant;

and where this subsection applies to any machinery or plant the amount that is to be brought into account by virtue of subsection (6) above by that person for the chargeable period related to the making of the rebate shall be increased by the addition of (or, if there would not otherwise be a disposal value for that chargeable period, shall be) the disposal value of the machinery or plant in respect of which that rebate is made.

(8) Except in [F61 subsections (6A) and (7)] above, any reference in this Act to subsection (6) above (but not a reference to any specific provision of it) shall be taken to include a reference to [F61 subsections (6A) and (7)] above.]

Textual Amendments

F52 Words in Act repealed (with effect in accordance with s. 211(2) of the amending Act) by Finance Act 1994 (c. 9), s. 213(1), Sch. 26 Pt. 5(24)

F56 S. 24(1A) inserted (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), S. 59, Sch. 14 Pt. II para. 7(1).

F57 S. 24(2)(a)(ii) substituted (with effect in accordance with s. 211(2) of the amending Act) by Finance Act 1994 (c. 9), s. 213(4)

F58 Words in s. 24(3) repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 5(2), Sch. 19 Pt. V, Note 6

F59 S. 24(4) repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 5(3), Sch. 19 Pt. V, Note 6

F60 Words in s. 24(6) inserted (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), s. 59, Sch. 14 Pt. II para. 7(2).

F61 Words in s. 24(6)(8) substituted (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), s. 68(2)(4)(9).

F62 S. 24(6A) inserted (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), s. 68(3)(9).

F63 S. 24(7)(8) inserted (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), s. 59, Sch. 14 Pt. II para. 7(2).

Modifications etc. (not altering text)

C17 S. 24 restricted (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), s. 59, Sch. 10 paras. 9(3), 11(6), 13.

C18 S. 24 modified (3.5.1994) by Finance Act 1994 (c. 9), Sch. 24 para. 22(4)

C19 S. 24 modified (3.5.1994) by Finance Act 1994 (c. 9), Sch. 24 para. 22(3)

C20 S. 24 modified (with effect in accordance with Sch. 33 para. 5 of the amending Act) by Greater London Authority Act 1999 (c. 29), s. 425(2), Sch. 33 para. 4(9)(f); S.I. 1999/3434, art. 2

C21 Ss. 24-26 modified (28.7.2000) by Finance Act 2000 (c. 17), Sch. 22 para. 87(1)(b)

C22 Ss. 24-26 modified (with effect in accordance with s. 74(2)(4)(5) of the amending Act) by Finance Act 2000 (c. 17), s. 74(3)

C23 S. 24 modified (15.1.2001) by Transport Act 2000 (c. 38), s. 275(1), Sch. 26 para. 27(5)(6); S.I. 2000/3376, art. 2

C24 S. 24 modified (15.1.2001) by Transport Act 2000 (c. 38), s. 275(1), Sch. 26 para. 34(6)(7); S.I. 2000/3376, art. 2

C25 S. 24 modified (15.1.2001) by Transport Act 2000 (c. 38), s. 275(1), Sch. 26 para. 21(5)(6); S.I. 2000/3376, art. 2

C26 S. 24(2)(b) modified (with effect in accordance with Sch. 33 para. 5 of the amending Act) by Greater London Authority Act 1999 (c. 29), s. 425(2), Sch. 33 para. 4(9)(c); S.I. 1999/3434, art. 2

C27 S. 24(5) modified (with effect in accordance with Sch. 33 para. 5 of the amending Act) by Greater London Authority Act 1999 (c. 29), s. 425(2), Sch. 33 para. 4(9)(d); S.I. 1999/3434, art. 2

C28 S. 24(6)(c)(iv) applied (28.7.2000) by Finance Act 2000 (c. 17), Sch. 22 para. 70(1)(2)

C29 S. 24(6)(c)(iv) applied (with modifications) (28.7.2000) by Finance Act 2000 (c. 17), Sch. 22 para. 75(2)

C30 S. 24(6)(c)(iv) applied (with modifications) (28.7.2000) by Finance Act 2000 (c. 17), Sch. 22 para. 76(2)

25 Qualifying expenditure. U.K.

(1) Subject to subsections (2) to (9) below, for the purposes of section 24, a person’s qualifying expenditure for a chargeable period is the aggregate of the following amounts—

(a) the balance remaining after deducting any first-year allowances made in respect thereof of any capital expenditure incurred by him on the provision for the purposes of the trade of machinery or plant being expenditure incurred in the chargeable period in question F52 ... or at any previous time, and not being—

(i) expenditure which, or any part of which, has formed part of his qualifying expenditure for any previous chargeable period, or

(ii) expenditure in respect of which a first-year allowance is or could (assuming a claim therefor F64 ... ) be made for the chargeable period in question; and

(b) if for the chargeable period immediately preceding the chargeable period in question there was an excess of qualifying expenditure over disposal value, the balance of that excess after deducting any writing-down allowance made by reference thereto.

F65 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) In any case where—

(a) a person carrying on a trade F66 ... incurs capital expenditure on the provision of machinery or plant for the purposes of the trade, and

(b) if a claim were made in that behalf, a first-year allowance would fall to be made in respect of that expenditure for the chargeable period related to the incurring of it, and

(c) no claim is made but by notice given to [F67 an officer of the Board within the period specified in subsection (3A) below], the person concerned elects that this subsection shall apply,

then, for the purposes of section 24, that expenditure shall not, by virtue of subsection (1)(a)(ii) above, be excluded from the capital expenditure referred to in subsection (1)(a) above.

[F68 (3A) The period mentioned in subsection (3) above is—

(a) for the purposes of income tax, the period ending with the first anniversary of the 31st January next following the year of assessment in which ends the chargeable period related to the incurring of the expenditure;

(b) for the purposes of corporation tax, the period of two years beginning at the end of the chargeable period related to the incurring of the expenditure.]

(4) In any case where—

(a) a person F69 ... carrying on a trade has incurred capital expenditure on the provision of machinery or plant for the purposes of the trade, and

(b) a first-year allowance falls to be made to that person in respect of that expenditure (and F70 ... a claim is made for that allowance), and

(c) for the chargeable period related to the incurring of that expenditure, the amount of that first-year allowance or, as the case may be, the aggregate amount of that and other first-year allowances which fall to be made to that person is required to be reduced by virtue of section 22(7) or, in the case of ships, 30(1)(b),

then, for the purposes of section 24, an amount equal to the relevant portion of the expenditure giving rise to the first-year allowance or allowances referred to in paragraph (c) above shall be treated as expenditure in respect of which no first-year allowance is or could be made for the chargeable period in question.

(5) Subject to subsection (6) below, where—

(a) a first-year allowance is made in respect of capital expenditure on the provision of machinery or plant, and

(b) in the chargeable period related to the incurring of that expenditure, the disposal value of that machinery or plant falls to be brought into account in accordance with section 24(6),

that expenditure shall not be virtue of subsection (1)(a)(ii) above be excluded from the capital expenditure referred to in subsection (1)(a) above.

[F71 (5A) Subject to subsection (5B) below, capital expenditure incurred by any person in any chargeable period on the provision of machinery or plant for leasing under a finance lease shall not be brought into account so as to form part of that person’s qualifying expenditure for that period except to the extent of the part of the expenditure which is proportionate to the part of the chargeable period falling after the time when the expenditure was incurred.

(5B) Subsection (5A) above does not apply where, in the chargeable period related to the incurring of the expenditure, the disposal value of the machinery or plant falls to be brought into account in accordance with section 24(6).

(5C) Where under subsection (5A) above only part of any capital expenditure on the provision of any machinery or plant may be included in a person’s qualifying expenditure for any chargeable period, subsection (1)(a)(i) above shall not prevent the whole or any part of the remainder of that expenditure from being included in his qualifying expenditure for the next following chargeable period.]

(6) Where the event by reason of which disposal value falls to be brought into account as mentioned in [F72 subsection (5) or (5B) above] is the assignment of the benefit of a contract, subsection (1) above [F73 (as modified, where subsection (5) above applies, by that subsection)] shall have effect as if any reference in paragraph (a) to capital expenditure incurred were a reference to the total capital expenditure which the person in question would have incurred in respect of the machinery or plant if he had wholly performed the contract.

(7) Where an allowance is or has been made under any provision of Part V except section 122 in respect of any capital expenditure, none of that expenditure shall be taken into account in determining qualifying expenditure for the purpose of any allowance or charge under section 24.

This subsection shall not have effect in relation to any chargeable period F52 ... ending after 26th July 1989.

(8) All such assessments and adjustments of assessments shall be made as may be necessary to give effect to subsections (5)[F74 , (5B)] and (6) above.

(9) In subsection (4) above “the relevant portion" of expenditure giving rise to a first-year allowance or allowances is that which bears to the whole of that expenditure the same proportion as the amount of the reduction mentioned in subsection (4)(c) above bears to what the amount of the allowance or allowances would have been apart from that reduction.

Textual Amendments

F52 Words in Act repealed (with effect in accordance with s. 211(2) of the amending Act) by Finance Act 1994 (c. 9), s. 213(1), Sch. 26 Pt. 5(24)

F64 Words in s. 25(1)(a) repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 6(2), Sch. 19 Pt. V, Note 6

F65 S. 25(2) repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 6(3), Sch. 19 Pt. V, Note 6

F66 Words in s. 25(3)(a) repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 6(4), Sch. 19 Pt. V, Note 6

F67 Words in s. 25(3)(c) substituted (with effect in accordance with s. 135(3) of the amending Act) by Finance Act 1996 (c. 8), Sch. 21 para. 26(2)

F68 S. 25(3A) inserted (with effect in accordance with s. 135(3) of the amending Act) by Finance Act 1996 (c. 8), Sch. 21 para. 26(3)

F69 Words in s. 25(4)(a) repealed by Finance Act 1990 (c. 29), s. 103(1)(2), 132, Sch. 17 para. 6(5)(a), Sch. 19 Pt. V, Note 6

F70 Words in s. 25(4)(b) repealed by Finance Act 1990 (c. 29), ss. 103(1)(2), 132, Sch. 17 para. 6(5)(b), Sch. 19 Pt. V, Note 6

F71 S. 25(5A)-(5C) inserted (with effect in accordance with s. 44(5) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 44(2) (with s. 44(5)(a)(b))

F72 Words in s. 25(6) substituted (with effect in accordance with s. 44(5) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 44(3)(a) (with s. 44(5)(a)(b))

F73 Words in s. 25(6) substituted (with effect in accordance with s. 44(5) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 44(3)(b) (with s. 44(5)(a)(b))

F74 Word in s. 25(8) inserted (with effect in accordance with s. 44(5) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), s. 44(4) (with s. 44(5)(a)(b))

Modifications etc. (not altering text)

C21 Ss. 24-26 modified (28.7.2000) by Finance Act 2000 (c. 17), Sch. 22 para. 87(1)(b)

C22 Ss. 24-26 modified (with effect in accordance with s. 74(2)(4)(5) of the amending Act) by Finance Act 2000 (c. 17), s. 74(3)

C31 S. 25 modified (with effect in accordance with Sch. 33 para. 5 of the amending Act) by Greater London Authority Act 1999 (c. 29), s. 425(2), Sch. 33 para. 4(9)(e); S.I. 1999/3434, art. 2

C32 S. 25(1) modified (3.5.1994) by Finance Act 1994 (c. 9), s. 118(2)(a)(6)

C33 S. 25(3) modified (for the year of assessment 1988-1989) by S.I. 1991/851, regs. 1, 9, Sch. 2

C34 S. 25(3) modified (for the year of assessment 1989-1990) by S.I. 1992/511, regs. 1, 9, Sch.2.

C35 S. 25(3) applied (with modifications) (for the year of assessment 1990–91) by S.I. 1993/415, reg. 9, Sch.2

C36 S. 25(3) modified (for the year of assessment 1991-92) by The Lloyds Underwriters (Tax) (1991-92) Regulations 1994 (S.I. 1994/728), regs. 1(1), 9, Sch. 2

C37 S. 25(3) modified (for the years of assessment 1992-93 and 1993-94) by The Lloyds Underwriters (Tax) (1992–93 to 1996–97) Regulations 1995 (S.I. 1995/352), regs. 1(1), 14(1), Sch.

C38 S. 25(3) modified (for the year of assessment 1994-95) by The Lloyds Underwriters (Tax) (1992–93 to 1996–97) Regulations 1995 (S.I. 1995/352), regs. 1(1), 15(1), Sch.

26 The disposal value. U.K.

(1) Subject to subsection (2) below, for the purposes of section 24 the disposal value of any machinery or plant depends upon the event by reason of which it falls to be taken into account and—

(a) unless paragraph (b) below applies, if that event is the sale of the machinery or plant, equals the net proceeds to the person in question of the sale, together with any insurance moneys received by him in respect of the machinery or plant by reason of any event affecting the price obtainable on the sale, and, so far as it consists of capital sums, any other compensation of any description so received,

(b) if that event is the sale of the machinery or plant at a price lower than that which it would have fetched if sold in the open market, and otherwise than in circumstances such that—

(i) the buyer’s expenditure on the acquisition of the machinery or plant can be taken into account in making allowances to him under this Part or under Part VII and the buyer is not a dual resident investing company which is connected with the seller within the terms of section 839 of the principal Act, or

(ii) there is a charge to tax under Schedule E,

equals the price which the machinery or plant would have fetched if sold in the open market,

(c) if that event is the demolition or destruction of the machinery or plant, equals the net amount received by the person in question for the remains of the machinery or plant, together with any insurance moneys received by him in respect of the demolition or destruction and, so far as it consists of capital sums, any other compensation of any description so received,

(d) if that event is the permanent loss of the machinery or plant otherwise than in consequence of its demolition or destruction, equals any insurance moneys received by him in respect of the loss, and, so far as it consists of capital sums, any other compensation of any description so received,

(e) if that event is the permanent discontinuance of the trade before the occurrence of an event within paragraph (a), (b), (c) or (d) above, is the same as the disposal value specified for the last-mentioned event, F75 . . .

[F76 (ea) if that event is the grant of a right to use or otherwise deal with computer software for a consideration not consisting or not wholly consisting in money, equals the consideration in money which would have been given if the right had been granted in the open market;

(eb) unless paragraph (ea) above applies, if that event is the grant of a right to use or otherwise deal with computer software for no consideration or for a consideration in money lower than that which would have been given if the right had been granted in the open market, and otherwise than in circumstances such that—

(i) the grantee’s expenditure on the acquisition of the right can be taken into account in making allowances to him under this Part or under Part VII and the grantee is not a dual resident investing company which is connected with the grantor within the terms of section 839 of the principal Act, or

(ii) there is a charge to tax under Schedule E,

equals the consideration in money which would have been given if the right had been granted in the open market;

(ec) if that event is the grant of a right to use or otherwise deal with computer software and neither paragraph (ea) nor paragraph (eb) above applies, equals the net consideration in money received by the grantor in respect of the grant, together with any insurance moneys received by him in respect of the computer software by reason of any event affecting the consideration obtainable on the grant and, so far as it consists of capital sums, any other compensation of any description so received;]

F77 [(ee) if that event is the making of an additional VAT rebate in respect of capital expenditure incurred on the provision of the machinery or plant, equals the amount of that rebate;

[F78 (ef) if that event is a deemed disposal of the machinery or plant which arises solely by virtue of subsection (2), (4) or (6) of section 64A and capital compensation is received by the contractor or participator (within the meaning of that subsection), equals the amount of that compensation;

(eg) if that event is such a deemed disposal and no such compensation is so received, equals nil; and]]

(f) in the case of any other event, equals the price which the machinery or plant would have fetched if sold in the open market at the time of the event.

(2) The disposal value of any machinery or plant shall in no case exceed the capital expenditure incurred by the person in question on the provision of the machinery or plant for the purposes of the trade F79 [reduced by the aggregate amount of any additional VAT rebates made to him in respect of any of that capital expenditure.

F80 (2A) If the event by reason of which a disposal value is to be brought into account is the making of an additional VAT rebate to a person, subsection (2) above shall have effect as if the capital expenditure referred to in that subsection were reduced (or further reduced) by the amount of any disposal value brought into account by that person in respect of the machinery or plant by reason of any earlier event (other than the making of an additional VAT rebate).]

[F81 (2AA) In deciding for the purposes of subsection (2) above whether the disposal value of machinery or plant consisting of computer software or the right to use or otherwise deal with computer software exceeds the capital expenditure incurred by a person on its provision, the disposal value shall (for the purposes of that subsection only) be taken to be increased by the amount of any disposal value which, in respect of that person and that machinery or plant, falls or has fallen to be taken into account for the purposes of section 24 by virtue of any previous event falling within subsection (6A)(c) of that section.]

(3) Where the person mentioned in subsection (2) above has acquired the machinery or plant as a result of a transaction which was, or a series of transactions each of which was, between connected persons within the terms of section 839 of the principal Act, that subsection shall have effect as if it referred to the capital expenditure on the provision of the machinery or plant incurred by whichever party to that transaction, or to any of those transactions, incurred the greatest such expenditure.

F82 [(4) Where an additional VAT rebate has been made to any of the persons mentioned in subsection (3) above in respect of the capital expenditure incurred by him as there mentioned, that capital expenditure shall, in his case, be treated as reduced by the amount of the rebate, but no further reduction shall be made under subsection (2) above.]

Textual Amendments

F75 Word at end of s. 26(1)(e) repealed (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), s. 123, Sch. 19 Pt. V Note 11.

F76 S. 26(1)(ea)-(ec) inserted (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), s. 68(5)(9).

F77 S. 26(1)(ee) inserted (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), s. 59, Sch. 14 Pt. II para. 8(1).

F78 S. 26(1)(ef)(eg) substituted for word (with effect in accordance with s. 81(3) of the amending Act) by Finance Act 2000 (c. 17), s. 81(2)

F79 Words at end of s. 26(2) added (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), s. 59, Sch. 14 Pt. II para. 8(2).

F80 S. 26(2A) added (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), s. 59, Sch. 14 Pt. II para. 8(2).

F81 S. 26(2AA) inserted (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), s. 68(6)(9).

F82 S. 26(4) added (for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31), s. 59, Sch. 14 Pt. II para. 8(3).

Modifications etc. (not altering text)

C21 Ss. 24-26 modified (28.7.2000) by Finance Act 2000 (c. 17), Sch. 22 para. 87(1)(b)

C22 Ss. 24-26 modified (with effect in accordance with s. 74(2)(4)(5) of the amending Act) by Finance Act 2000 (c. 17), s. 74(3)

C39 S. 26(1) excluded (19.9.1994) by Coal Industry Act 1994 (c. 21), s. 68(4), Sch. 4 para. 20(3)(a); S.I. 1994/2189, art. 2, Sch.

27 Professions, employments, vocations etc. U.K.

(1) Except as otherwise provided and subject in particular to subsections (2) [F83 to (3)] below, the provisions of this Part shall, with any necessary adaptations, apply in relation to—

(a) professions, employments, vocations and offices, and

(b) the occupation of woodlands where the profits or gains thereof are assessable under Schedule D,

as they apply in relation to trades.

(2) The provisions of this Part in their application in accordance with this section to an office or employment—

(a) shall apply only to machinery or plant which is necessarily provided for use in the performance of the duties thereof, and

(b) shall have effect subject to section 198(2) of the principal Act (offices and employments with duties abroad).

[F84 (2A) In the case of machinery to which this subsection applies, subsection (2)(a) above shall have effect with the omission of the word “necessarily".

(2B) Subsection (2A) above applies to machinery if—

(a) it consists of a mechanically propelled road vehicle [F85 or a cycle], and

(b) capital expenditure incurred on its provision is incurred partly for the purposes of the office or employment and partly for other purposes.

[F86 In paragraph (a) “cycle” has the meaning given by section 192(1) of the Road Traffic Act 1988.]

(2C) Section 24 in its application in accordance with this section to an office or employment shall have effect, where a person’s qualifying expenditure consists of expenditure incurred on the provision of machinery to which subsection (2A) above applies, with the modifications set out in subsections (2D) and (2E) below.

(2D) In subsection (2)(b) for the word “whole" there shall be substituted the words “appropriate fraction".

(2E) The following subsection shall be inserted after subsection (2)— “(2A) For the purposes of subsection (2)(b) above the appropriate fraction is—

where—

A is the number of chargeable periods in the case of which—

• (a) the person has carried on the trade,

• (b) the machinery or plant has belonged to him, and

• (c) he has claimed an allowance falling to be made to him under this section by reference to expenditure incurred on the provision of the machinery or plant; and

B is the number of chargeable periods in the case of which—

• (a) the person has carried on the trade,

• (b) the machinery or plant has belonged to him, and

• (c) an allowance falls to be made to him under this section by reference to expenditure incurred on the provision of the machinery or plant."”]

(3) This section shall have effect from 6th April 1993 with the omission of subsection (1)(b).

Textual Amendments

F83 Words substituted by Finance Act 1990 (c. 29), s. 87(1)(4)

F84 S. 27(2A)–(2E) inserted by Finance Act 1990 (c. 29), s. 87(2)(4)

F85 Words in s. 27(2B)(a) inserted (with effect in accordance with s. 50(3) of the amending Act) by Finance Act 1999 (c. 16), s. 50(2)(a)

F86 Words in s. 27(2B) inserted (with effect in accordance with s. 50(3) of the amending Act) by Finance Act 1999 (c. 16), s. 50(2)(b)

[F87 28 Investment companies. U.K.

(1) This Part and the other provisions of the Corporation Tax Acts relating to allowances or charges under this Part apply with the necessary adaptations in relation to machinery and plant provided for use or used for the purposes of the management of the business of an investment company (as defined in section 130 of the principal Act) as they apply in relation to machinery and plant provided for use or used for the purposes of a trade.

(2) Effect shall be given to allowances and charges falling to be made by virtue of this section as follows—

(a) any allowance falling to be made for any accounting period shall, as far as may be, be given effect by deducting the amount of the allowance from any income for the period of the business, and in so far as effect cannot be so given section 75(4) of the principal Act shall apply; and

(b) effect shall be given to any charge falling to be made under this section by treating the amount on which the charge is to be made as income of the business;

and sections 73, 144 and 145 do not apply.

(3) Except as provided by subsection (2) above, the Corporation Tax Acts apply in relation to allowances or charges falling to be made by virtue of this section as if they were to be made in taxing a trade.

(4) For the purposes of this section the purposes of the management of a business shall be taken to be those purposes expenditure on which would be treated as expenses of management within section 75 of the principal Act.

(5) Corresponding allowances or charges in the case of the same machinery or plant shall not be made under this Part both under this section and in some other way.

(6) Expenditure to which this section applies shall not be taken into account otherwise than under this Part or as provided by section 75(4) of the principal Act.]

Textual Amendments

F87 S. 28 substituted (with effect in accordance with Sch. 8 paras. 55(2), 57(1) of the amending Act) by Finance Act 1995 (c. 4), Sch. 8 para. 24

Modifications etc. (not altering text)

C40 S. 28 modified by S.I. 1992/1655, reg. 18A (as inserted (10.8.1995) by The Friendly Societies (Modification of the Corporation Tax Acts) (Amendment) Regulations 1995 (S.I. 1995/1916), regs. 1, 8)

[F88 28A Schedule A cases. U.K.

(1) Subject to subsection (3) below and section 29, where any person carries on a Schedule A business—

(a) that person’s Schedule A business shall be treated as a trade for the purposes of this Part and of the other provisions of the Tax Acts so far as relating to allowances or charges under this Part; and

(b) that trade shall be treated for those purposes as one trade carried on separately from any other trade carried on by that person.

F89 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) Expenditure incurred in providing machinery or plant for use in a dwelling-house shall not, by virtue of this section, be treated as incurred in providing that machinery or plant for the purposes of a trade.

(4) Where machinery or plant is provided partly for use in a dwelling-house and partly for other purposes, such apportionment of the expenditure incurred in providing that machinery or plant shall be made for the purposes of subsection (3) above as is just and reasonable.]

Textual Amendments

F88 S. 28A inserted (with effect in accordance with Sch. 15 para. 9 of the amending Act) by Finance Act 1997 (c. 16), Sch. 15 para. 3

F89 S. 28A(2) repealed (with effect in accordance with s. 38(2)(3) of the amending Act) by Finance Act 1998 (c. 36), s. 38(2)(3), Sch. 27 Pt. 3(4)

29 Furnished holiday lettings. U.K.

[F90 (1) F91 ... This Part and the other provisions of the Tax Acts so far as relating to allowances or charges under this Part shall have effect as if so much of the Schedule A business of any person as consists in the commercial letting of furnished holiday accommodation in the United Kingdom were a single trade carried on separately from both—

(a) the trade in which, in accordance with section 28A, the rest (if any) of that business is comprised; and

(b) any other trade carried on by that person.]

F92 (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) Subsection (1) above shall be construed as one with section 503 of the principal Act and, accordingly, section 504 of that Act shall also apply for the purposes of this section.

(3) Where there is a letting of accommodation only part of which is holiday accommodation, such apportionments shall be made for the purposes of this section as [F93 are] just and reasonable.

Textual Amendments

F90 S. 29(1)(1A) substituted for s. 29(1) (with effect in accordance with Sch. 15 para. 9 of the amending Act) by Finance Act 1997 (c. 16), Sch. 15 para. 4

F91 Words in s. 29(1) repealed (with effect in accordance with s. 38(2)(3) of the amending Act) by Finance Act 1998 (c. 36), s. 38(2)(3), Sch. 5 para. 51(a), Sch. 27 Pt. 3(4) (with Sch. 5 Pt. 4)

F92 S. 29(1A) repealed (with effect in accordance with s. 38(2)(3) of the amending Act) by Finance Act 1998 (c. 36), s. 38(2)(3), Sch. 5 para. 51(b), Sch. 27 Pt. 3(4) (with Sch. 5 Pt. 4)

F93 Word in s. 29(3) substituted (with effect in accordance with reg. 134(2) of the amending Act) by Finance Act 1996 (c. 8), Sch. 20 para. 44

Modifications etc. (not altering text)

C41 S. 29 excluded by 1988 c. 1, s. 70A (as inserted (with effect in accordance with s. 38(2)(3) of the amending Act) by Finance Act 1998 (c. 36), s. 38(2)(3), Sch. 5 para. 25 (with Sch. 5 Pt. 4))

C42 S. 29(1) modified (with effect in accordance with s. 39(4)(5) of the amending Act) by Finance Act 1995 (c. 4), Sch. 6 para. 31