Part 2 Plant and machinery allowances
Chapter 17 Anti-avoidance
Finance leases and certain operating leases
220 Allocation of expenditure to a chargeable period
F1A1
Subsection (1) applies to a company for a chargeable period if—
(a)
at the end of the ICTA period of account which is the basis period for the chargeable period, the company is a member of a group, and
(b)
the last day of that ICTA period of account is not also the last day of an ICTA period of account of the principal company of the group.
(1)
Subject to subsection (2), if F2the company incurs at any time in F3the chargeable period capital expenditure on the provision of plant or machinery for leasing under a finance lease F4or under a qualifying operating lease (see subsection (4)) —
(a)
the part of the expenditure which is proportional to the part of that chargeable period falling before that time is not to be taken into account in determining that F5company's available qualifying expenditure for that period, but
(b)
this does not prevent that part of the expenditure being taken into account in determining that F5company's available qualifying expenditure for any subsequent chargeable period.
(2)
Subsection (1)(a) does not apply to a chargeable period if a disposal event occurs in that period in respect of the plant or machinery.
F6(3)
The following provisions have effect for the interpretation of this section.
(4)
A “qualifying operating lease” is a plant or machinery lease that meets the following conditions—
(a)
it is not a finance lease,
(b)
it is a funding lease,
(c)
its term is longer than 4 years but not longer than 5 years.
(5)
An ICTA period of account is the basis period for a chargeable period if the chargeable period coincides with, or falls within, the ICTA period of account.
(6)
An “ICTA period of account” is a period of account as defined in section 832(1) of ICTA.
(7)
The provisions of section 170(3) to (6) of TCGA 1992 apply to determine for the purposes of this section—
(a)
whether a company is member of a group, and
(b)
which company is the principal company of the group.
(8)
But, in applying those provisions for the purposes of this section, a company (“the subsidiary company”) that does not have ordinary share capital is to be treated as being a qualifying 75% subsidiary of another company (“the parent company”) if the parent company—
(a)
has control of the subsidiary company, within the meaning of section 840 of ICTA, and
(b)
is beneficially entitled to the appropriate proportion of profits and assets.
(9)
The parent company is beneficially entitled to the appropriate proportion of profits and assets if (and only if) it—
(a)
is beneficially entitled to at least 75% of any profits available for distribution to equity holders of the subsidiary company, and
(b)
would be beneficially entitled to at least 75% of any assets of the subsidiary company available for distribution to its equity holders on a winding-up.
(10)
The provisions of Schedule 18 to ICTA (equity holders and profits or assets etc) also apply for the purposes of this section.
(11)
In this section, the following expressions have the same meaning as in Chapter 6A of Part 2 (interpretation of provisions about long funding leases)—
“funding lease”,
“plant or machinery lease”,
“term”, in relation to a lease.