10B Purchases of buildings and structures in enterprise zones within two years of use.

1

Without prejudice to section 10A, this section shall apply where—

a

expenditure is incurred on the construction of a building or structure (actual expenditure);

b

some or all of that expenditure is incurred, or is incurred under a contract entered into, at a time when the site of the building or structure is in an enterprise zone, being a time not more than 10 years after the site was first included in the zone;

c

whether or not there were any sales of the relevant interest in the building or structure before it was used, that interest is sold after the building or structure has been used but before the expiry of the period of two years beginning with the date on which the building or structure was first used; and

d

that sale is the first such sale in that period.

2

Where this section applies—

a

any balancing allowance or charge which falls to be made on the occasion of the sale shall be so made;

b

the residue of expenditure immediately after the sale (if any) shall be left out of account for the purposes of this Part;

c

the person who buys the relevant interest (the purchaser) shall be deemed for the purposes of sections 1 to 8 to have incurred, on the date when the purchase price becomes payable, expenditure on the construction of the building or structure (deemed expenditure) of an amount determined in accordance with the following provisions of this section; and

d

in relation to the deemed expenditure, the building or structure shall be treated for the purposes of sections 1 to 8 as not having been used before the date of the sale.

3

The deemed expenditure shall be regarded as comprising an enterprise zone element and a non-enterprise zone element and the amount of the deemed expenditure shall accordingly be the sum of the enterprise zone element and the non-enterprise zone element.

4

The enterprise zone element of the deemed expenditure shall be calculated in accordance with the formula—

$Ax\frac{B}{C}$

5

In subsection (4) above—

• A is the actual expenditure or the net price paid by the purchaser for the relevant interest, whichever is the less;

• B is the expenditure falling within subsection (1)(b) above; and

• C is the actual expenditure.

6

The non-enterprise zone element of the deemed expenditure shall be calculated in accordance with the formula—

$A-\left(Ax\frac{B}{C}\right)$

7

In subsection (6) above—

• A is the actual expenditure or the net price paid by the purchaser for the relevant interest, whichever is the less;

• B is the expenditure falling within subsection (1)(b) above; and

• C is the actual expenditure.

8

Where the actual expenditure was incurred by a person carrying on a trade which consists, in whole or in part, in the construction of buildings or structures with a view to their sale and he sells the relevant interest in the building or structure in the course of that trade or, as the case may be, of that part of that trade, then—

a

if that sale is the sale falling within subsection (1)(c) above—

i

section 10(4) and (5) shall not apply; and

ii

subsection (5) above shall have effect as if for the definition of A there were substituted—

"

A is the net price paid by the purchaser for the relevant interest;";

b

if that sale is a sale which occurs before the sale falling within subsection (1)(c) above, subsections (5) and (7) above shall have effect as if the reference in the definition of A in each of those subsections to the actual expenditure were a reference to the price paid on that sale.

9

Notwithstanding the provisions of subsection (2)(c) above—

a

the enterprise zone element of the deemed expenditure shall be treated for the purpose only of determining entitlement to allowances as incurred at a time when the site of the building or structure is in an enterprise zone, being a time not more than 10 years after the site was first included in the zone; and

b

the non-enterprise zone element of the deemed expenditure shall be treated for that purpose as not incurred, and not incurred under a contract entered into, at such a time.

10

This section shall have effect subject to section 17A.