(1)In the second sentence in section 40(4) of the M1Capital Allowances Act 1990 (shortening of “requisite period” while assets used for qualifying purpose), after “effect” there shall be inserted “ for the purposes of sections 31(2) and 37(6) ”.
(2)In section 42(1) of that Act (assets leased to non-residents), for paragraph (b) there shall be substituted the following paragraph—
“(b)does not use the machinery or plant exclusively for earning such profits or gains as are chargeable to tax (whether as profits or gains arising from a trade carried on in the United Kingdom or by virtue of section 830(4) of the principal Act),”.
(3)In section 50 of that Act (interpretation of Chapter V), after subsection (3) there shall be inserted the following subsection—
“(3A)References in this Chapter to profits or gains chargeable to tax shall not include any of those arising to a person who, under arrangements specified in an Order in Council making any such provisions as are referred to in section 788 of the principal Act (double taxation arrangements), is afforded, or is entitled to claim, any relief from the tax chargeable thereon.”
(4)This section shall have effect in relation to the use of machinery or plant for leasing under leases entered into on or after 16th March 1993.