Capital Allowances Act 1990 (repealed)

137 Allowances for capital expenditure on scientific research. U.K.

(1) Subject to the provisions of this section and section 138, where a person—

(a) while carrying on a trade, incurs expenditure of a capital nature on [F1 research and development] related to that trade and directly undertaken by him or on his behalf, or

(b) incurs expenditure of a capital nature on [F1 research and development] directly undertaken by him or on his behalf, and thereafter sets up and commences a trade connected with that research [F2 and development],

a deduction equal to the whole of the expenditure shall be allowed in taxing the trade for the relevant chargeable period as defined in subsections (5) to (7) below.

F3 [(1A) Where a person—

(a) has incurred allowable [F1 research and development] expenditure of a capital nature as mentioned in paragraph (a) or (b) of subsection (1) above, and

(b) incurs an additional VAT liability in respect of that expenditure at any time before the relevant event (as defined in section 138(1)) occurs in relation to the asset in question,

that liability shall, subject to the following provisions of this section, be regarded for the purposes of this Act as expenditure of a capital nature incurred on the [F1 research and development].]

(2) No allowance shall be made under subsection (1) above in respect of expenditure on the acquisition of, or of rights in or over, any land except in so far as, on a just apportionment, that expenditure is referable to the acquisition of, or of rights in or over, or of machinery or plant which forms part of, a building or other structure already constructed on that land.

(3) For the purposes of this section, expenditure on the provision of a dwelling is not [F1 research and development] expenditure; but where part of a building is used for [F1 research and development] and part consists of a dwelling and[F4 , disregarding any additional VAT liability or rebate,] the capital expenditure which it is just to apportion to the construction or acquisition of the dwelling is not more than one-quarter of the capital expenditure which is referable to the construction or acquisition of the whole building, the whole of the building shall be treated for the purposes of this Part as used for [F1 research and development].

(4) Subject to subsections (2) and (3) above, where after 26th July 1989 a person incurs capital expenditure which is partly within subsection (1) above and partly not, such apportionment of the expenditure shall be made for the purposes of this Part as may be just.

[F5 (5) The relevant chargeable period shall be the chargeable period in which the expenditure was incurred or, if it was incurred before the setting up and commencement of the trade, the chargeable period beginning with that setting up and commencement.]

Textual Amendments

F1 Words in s. 137(1)(1A)(3) substituted (with effect in accordance with s. 68(1)(2) of the amending Act) by Finance Act 2000 (c. 17), Sch. 19 paras. 7, 8

F2 Words in s. 137(1)(b) inserted (with effect in accordance with s. 68(1)(2) of the amending Act) by Finance Act 2000 (c. 17), Sch. 19 para. 9

F3 S. 137(1A) inserted(for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31, SIF 63:1), s. 59, Sch. 14 Pt. III para. 12(1).

F4 Words in s. 137(3) inserted(for any chargeable period or its basis period ending on or after 06.04.1990) by Finance Act 1991 (c. 31, SIF 63:1), s. 59, Sch. 14 Pt. III para. 12(2).

F5 S. 137(5) substituted for s. 137(5)-(7) (with effect in accordance with s. 211(2) of the amending Act) by Finance Act 1994 (c. 9), s. 213(10)

Modifications etc. (not altering text)

C1 S. 137 restricted (in relation to tax for the year 1992/93 and subsequent years subject as mentioned in s. 289 of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 195(6)(a), 289(1) (with ss. 60, 101(1), 201(3)).