Corporation Tax Act 2009

Part 14 Remediation of contaminated land

Chapter 1 Introduction

Introductory

1143 Overview of Part

(1) This Part provides for corporation tax relief for expenditure on land in the United Kingdom, where the expenditure is incurred for the purpose of remedying contamination of the land.

(2) The reliefs available under Chapter 2 are—

(a) a deduction in calculating the profits of a UK property business or a trade carried on by a company for expenditure which is capital expenditure, and

(b) an additional deduction for expenditure which is allowed as a deduction in calculating the profits of such a business or trade.

(3) Chapter 3 provides for the payment of tax credits (“land remediation tax credits”) where a company—

(a) obtains relief under Chapter 2, and

(b) makes a loss in a UK property business or a trade.

(4) Chapter 4 contains provision about—

(a) the relief available to a company which carries on life assurance business, and

(b) the payment of tax credits (“life assurance company tax credits”) to such a company.

(5) Chapter 5 contains an anti-avoidance provision dealing with artificially inflated claims for relief under this Part or tax credits.

(6) Chapter 6 contains supplementary provision, including definitions.

(7) For information about the procedure for making claims under this Part see Schedule 18 to FA 1998, in particular Part 9B (claims relating to remediation of contaminated land) of that Schedule.

Basic definitions

1144 “Qualifying land remediation expenditure”

(1) For the purposes of this Part a company’s “qualifying land remediation expenditure” means expenditure incurred by it in relation to which each of conditions A to E is met.

(2) Condition A is that it is expenditure on land all or part of which is in a contaminated state (see section 1145).

(3) Condition B is that the expenditure would not have been incurred if the land had not been in a contaminated state.

(4) Condition C is that it is expenditure on relevant land remediation undertaken by the company itself or on its behalf (see section 1146).

(5) Condition D is that the expenditure is—

(a) incurred on staffing costs (see section 1170),

(b) incurred on materials (see section 1172), or

(c) qualifying expenditure on sub-contracted land remediation (see sections 1174 to 1176).

(6) Condition E is that the expenditure is not subsidised (see section 1177).

(7) See also section 1173 for provision about some cases in which condition B is treated as met.

1145 Land “in a contaminated state”

(1) For the purposes of this Part land is in a contaminated state if (and only if) it is in such a condition, because of substances in, on or under the land, that—

(a) harm is being caused or there is the possibility of harm being caused, or

(b) pollution of controlled waters is being, or is likely to be, caused.

(2) For the purposes of this Part a nuclear site is not land in a contaminated state.

(3) “Nuclear site” means—

(a) any site in respect of which a nuclear site licence is for the time being in force, or

(b) any site in respect of which, after the revocation or surrender of a nuclear site licence, the period of responsibility of the licensee has not yet come to an end.

(4) In subsection (3) “nuclear site licence”, “licensee” and “period of responsibility” have the same meaning as in the Nuclear Installations Act 1965 (c. 57).

1146 “Relevant land remediation”

(1) For the purposes of this Part “relevant land remediation”, in relation to land acquired by a company, means—

(a) activities in relation to which conditions A and B are met, and

(b) if there are such activities, relevant preparatory activity.

(2) Condition A is that the activities comprise the doing of any works, the carrying out of any operations or the taking of any steps in relation to—

(a) the land in question,

(b) any controlled waters affected by that land, or

(c) any land adjoining or adjacent to that land.

(3) Condition B is that the purpose of the activities is—

(a) to prevent or minimise, or remedy or mitigate the effects of, any harm, or any pollution of controlled waters, by virtue of which the land is in a contaminated state, or

(b) to restore the land or waters to their former state.

(4) For the purposes of subsection (1)(b) “relevant preparatory activity” means activity—

(a) which comprises the doing of anything for the purpose of assessing the condition of—

(i) the land in question,

(ii) any controlled waters affected by that land, or

(iii) any land adjoining or adjacent to that land, and

(b) which is connected to such activities within subsection (1)(a) as are undertaken by the company itself or on its behalf.

(5) For the purposes of this section controlled waters are “affected by” land in a contaminated state if (and only if) the land in question is in such a condition, because of substances in, on or under the land, that pollution of those waters is being, or is likely to be, caused.

Chapter 2 Reliefs for expenditure on contaminated land

1147 Deduction for capital expenditure

(1) A company is entitled to relief for an accounting period if conditions A, B and C are met.

(2) Condition A is that land in the United Kingdom is, or has been, acquired by the company for the purposes of a UK property business or a trade carried on by it.

(3) Condition B is that at the time of the acquisition all or part of the land is or was in a contaminated state.

(4) Condition C is that the company incurs capital expenditure which is qualifying land remediation expenditure in respect of the land.

(5) For the company to obtain the relief it must make an election.

(6) The relief is that for corporation tax purposes the capital expenditure is allowed as a deduction in calculating the profits of the UK property business or the trade for the period in which the expenditure is incurred.

(7) For the purposes of this section capital expenditure incurred for the purposes of a UK property business or a trade by a company about to carry on the business or trade is to be treated as incurred by the company—

(a) on the first day on which it does carry it on, and

(b) in the course of doing so.

(8) Relief is not available under this section in relation to so much of the qualifying land remediation expenditure as represents capital expenditure in respect of which an allowance has been, or may be, made under the enactments relating to capital allowances.

1148 Election under section 1147

(1) An election under section 1147 must specify the accounting period in respect of which it is made.

(2) The election must be made by notice in writing to an officer of Revenue and Customs.

(3) The notice must be given before the end of the period of two years beginning immediately after the end of the accounting period to which the election relates.

1149 Additional deduction for qualifying land remediation expenditure

(1) A company is entitled to corporation tax relief for an accounting period if each of conditions A to D is met.

(2) Condition A is that land in the United Kingdom is, or has been, acquired by the company for the purposes of a UK property business or a trade carried on by it.

(3) Condition B is that at the time of acquisition all or part of the land is or was in a contaminated state.

(4) Condition C is that the company carries on a UK property business or a trade in the accounting period.

(5) Condition D is that the company incurs qualifying land remediation expenditure in respect of the land which is allowable as a deduction in calculating for corporation tax purposes the profits of the business or the trade for the period.

(6) For the company to obtain the relief it must make a claim.

(7) The relief is an additional deduction in calculating the profits of the business or the trade for the period.

(8) The amount of the additional deduction is 50% of the qualifying land remediation expenditure.

1150 No relief if company responsible for contamination

A company is not entitled to relief under this Chapter in respect of expenditure on land all or part of which is in a contaminated state if the land is in that state wholly or partly as a result of any thing done, or omitted to be done, at any time by—

(a) the company, or

(b) a person with a relevant connection to the company (see section 1178).

Chapter 3 Land remediation tax credit

Entitlement and payment

1151 Entitlement to and payment of tax credit

(1) A company is entitled to a land remediation tax credit for an accounting period if it has a qualifying land remediation loss in the period (see section 1152).

(2) For the company to obtain a land remediation tax credit in respect of all or part of the qualifying land remediation loss it must make a claim.

(3) The amount of a land remediation tax credit to which the company is entitled is determined in accordance with section 1154.

(4) If a company claims a land remediation tax credit to which it is entitled for an accounting period, an officer of Revenue and Customs must pay to the company the amount of the credit.

This is subject to section 1155.

(5) See also section 1158, which restricts the carry forward of losses where a company claims a land remediation tax credit.

1152 Meaning of “qualifying land remediation loss”

(1) For the purposes of this Chapter a company has a “qualifying land remediation loss” in an accounting period if in the period—

(a) it obtains an additional deduction under section 1149 in calculating the profits of a UK property business or a trade, and

(b) it makes a UK property business loss in the business or a trading loss in the trade.

(2) The amount of the qualifying land remediation loss is—

(a) so much of the UK property business loss or trading loss as is unrelieved (see section 1153), or

(b) if less, 150% of the qualifying land remediation expenditure in respect of which the relief was obtained.

1153 Amount of a loss which is “unrelieved”

(1) The amount of a UK property business loss or trading loss that is “unrelieved” is the amount of the loss reduced by—

(a) any relief obtained by the company under section 392A(1) of ICTA, or that was or could have been obtained by it making a claim under section 393A(1)(a) of ICTA, to set the loss against profits of the same accounting period,

(b) any other relief obtained by the company in respect of the loss, including relief under section 393A(1)(b) of ICTA (losses set against profits of an earlier accounting period), and

(c) any loss surrendered under section 403(1) of ICTA (surrender of relief to group or consortium members).

(2) No account is to be taken for this purpose of—

(a) any UK property business losses or trading losses brought forward from an earlier accounting period under section 392A(2) or 393(1) of ICTA, or

(b) any trading losses carried back from a later accounting period under section 393A(1)(b) of ICTA.

(3) Subsections (4) to (7) apply (instead of subsection (1)) to determine the amount of a UK property business loss that is “unrelieved” in an accounting period (“the relevant accounting period”) in a case where, as a result of section 432AB(3) of ICTA, the loss is treated for the purposes of section 76 of that Act as expenses payable which fall to be brought into account at Step 3 in subsection (7) of that section.

(4) If in the relevant accounting period no amount falls to be carried forward to a subsequent accounting period under section 76(12) of ICTA (unrelieved expenses carried forward), no amount of the UK property business loss is unrelieved.

(5) If in the relevant accounting period there is an amount which falls to be carried forward to a subsequent accounting period under section 76(12) of ICTA, the amount of the UK property business loss that is unrelieved is—

(a) the amount which so falls to be carried forward, or

(b) if less, the amount of the UK property business loss.

(6) In determining for the purposes of subsection (4) or (5) whether there is an amount which falls to be carried forward to a subsequent accounting period under section 76(12) of ICTA, no account is to be taken of the amounts specified in subsection (7).

(7) Those amounts are amounts—

(a) brought forward from an earlier accounting period, and

(b) treated for the purposes of section 76 of ICTA as expenses payable which fall to be brought into account for the relevant accounting period in accordance with—

(i) Step 7 in section 76(7) of ICTA, as a result of a previous application of section 76(12) or (13) of that Act, or

(ii) Step 3 in section 76(7) of ICTA, as a result of section 391 of this Act (carry forward of surplus deficit).

(8) If—

(a) the company is an insurance company, and

(b) it is treated under section 432AA of ICTA as carrying on more than one UK property business,

references in this section to a UK property business loss are to be read in accordance with section 432AB(4) of ICTA (aggregation of losses).

Amount of tax credit

1154 Amount of tax credit

(1) The amount of the land remediation tax credit to which a company is entitled for an accounting period is 16% of the amount of the qualifying land remediation loss for the period.

(2) The Treasury may by order replace the percentage for the time being specified in subsection (1) with a different percentage.

(3) An order under subsection (2) may contain incidental, supplemental, consequential and transitional provision and savings.

Supplementary

1155 Payment of tax credit

(1) This section applies if a land remediation tax credit for an accounting period is payable to a company.

(2) The amount payable in respect of—

(a) the land remediation tax credit, or

(b) interest on the credit payable under section 826 of ICTA,

may be applied in discharging any liability of the company to pay corporation tax.

(3) So far as the amount is so applied, the duty of the officer of Revenue and Customs to pay the credit under section 1151(4) is discharged.

(4) Subsection (5) applies if the company’s tax return for the accounting period is enquired into by an officer of Revenue and Customs.

(5) In that case—

(a) no payment in respect of the land remediation tax credit for the period need be made before the officer’s enquiries are completed (see paragraph 32 of Schedule 18 to FA 1998), but

(b) an officer may make a payment on a provisional basis of such amount as the officer thinks fit.

(6) No payment need be made in respect of the land remediation tax credit if the company has outstanding PAYE and NIC liabilities for the period.

(7) A company has outstanding PAYE and NIC liabilities for an accounting period if it has not paid to an officer of Revenue and Customs any amount that it is required to pay—

(a) under PAYE regulations, or

(b) in respect of Class 1 national insurance contributions,

for payment periods ending in the accounting period.

(8) “Payment period” means a period—

(a) which ends on the 5th day of a month, and

(b) for which the company is liable to account for income tax and national insurance contributions to an officer of Revenue and Customs.

1156 Tax credit payment not income of company

A payment in respect of a land remediation tax credit is not income of the company for any tax purposes.

1157 Exclusion for capital gains purposes of certain expenditure

(1) This section applies if in an accounting period a payment is made to a company in respect of a land remediation tax credit.

(2) The qualifying land remediation expenditure in respect of which the payment is made is to be treated as if it were excluded by section 39 of TCGA 1992 from the sums allowable under section 38 of that Act.

1158 Restriction on losses carried forward where tax credit claimed

(1) For the purposes of section 392A of ICTA (UK property business losses carried forward) a company’s UK property business loss for an accounting period in which it claims a land remediation tax credit to which it is entitled is treated as reduced by the amount of the surrendered loss for the period.

(2) For the purposes of section 393 of ICTA (relief of trading losses against future trading profits) a company’s trading loss for an accounting period in which it claims a land remediation tax credit to which it is entitled is treated as reduced by the amount of the surrendered loss for the period.

(3) Subsection (4) applies (instead of subsection (1)) if in an accounting period—

(a) as a result of section 432AB(3) of ICTA, a company’s UK property business loss is treated for the purposes of section 76 of that Act as expenses payable which fall to be brought into account at Step 3 in subsection (7) of that section,

(b) an amount falls to be carried forward to a subsequent accounting period under section 76(12) of ICTA (unrelieved expenses carried forward), and

(c) the company claims a land remediation tax credit for the period.

(4) The amount which falls to be carried forward to a subsequent accounting period under section 76(12) of ICTA is treated as reduced by the amount of the surrendered loss for the period.

(5) References in this section to “the amount of the surrendered loss” for an accounting period are to the amount of any qualifying land remediation loss in respect of which a land remediation tax credit is claimed for the period.

Chapter 4 Special provision for life assurance business

General

1159 Limitation on relief under Chapter 2

(1) Chapter 2 does not apply to allow an insurance company—

(a) any deduction under section 1147, or

(b) any additional deduction under section 1149,

in calculating in accordance with the provisions mentioned in subsection (2) the profits for an accounting period which arise to the company from its life assurance business or from its gross roll-up business.

(2) The provisions referred to in subsection (1) are those applicable for the purposes of section 35 (charge on trade profits).

I minus E basis

1160 Provision in respect of I minus E basis

The remaining provisions of this Chapter apply if, for an accounting period, an insurance company is charged to tax under the I minus E basis in respect of its life assurance business.

Relief for qualifying Chapter 4 expenditure

1161 Relief in respect of I minus E basis: enhanced expenses payable

(1) A company is entitled to relief for an accounting period if conditions A, B and C are met.

(2) Condition A is that land in the United Kingdom is a management asset of the company.

(3) Condition B is that at the time of acquisition of the land by the company all or part of the land is or was in a contaminated state (see section 1145).

(4) Condition C is that the company incurs qualifying Chapter 4 expenditure in the accounting period in respect of the land (see section 1162).

(5) For the company to obtain the relief it must make a claim.

(6) The relief is that the company may treat 150% of the qualifying Chapter 4 expenditure as expenses payable which fall to be brought into account for the accounting period at Step 1 in section 76(7) of ICTA (deduction for expenses payable).

(7) For the purposes of this section land is a management asset of a company if it is—

(a) an asset provided for use or used for the management of life assurance business carried on by the company, or

(b) an asset in respect of which expenditure is being incurred with a view to such use by the company.

1162 Meaning of “qualifying Chapter 4 expenditure”

For the purposes of this Chapter a company’s “qualifying Chapter 4 expenditure” in an accounting period means—

(a) its qualifying land remediation expenditure in the period, less

(b) the amount (if any) which as a result of paragraph (a) of Step 1 in section 76(7) of ICTA is not to be brought into account at that step as expenses payable for the period.

1163 No relief if company responsible for contamination

A company is not entitled to relief under section 1161 in respect of expenditure on land all or part of which is in a contaminated state if the land is in that state wholly or partly as a result of any thing done, or omitted to be done, at any time by—

(a) the company, or

(b) a person with a relevant connection to the company (see section 1178).

Life assurance company tax credits

1164 Entitlement to tax credit

(1) A company is entitled to a life assurance company tax credit for an accounting period if it has a qualifying life assurance business loss in the period (see section 1165).

(2) For the company to obtain a life assurance company tax credit in respect of all or part of the qualifying life assurance business loss it must make a claim.

(3) The amount of a life assurance company tax credit to which the company is entitled is determined in accordance with section 1166.

(4) See also section 1168, which restricts the carry forward of expenses payable where a company claims a life assurance company tax credit.

1165 Meaning of “qualifying life assurance business loss”

(1) For the purposes of this Chapter a company has a “qualifying life assurance business loss” in an accounting period (“the relevant accounting period”) if in the period—

(a) it is entitled to relief under section 1161, and

(b) an amount falls to be carried forward to a subsequent accounting period under section 76(12) of ICTA (unrelieved expenses carried forward).

(2) In determining for the purposes of subsection (1)(b) whether there is an amount which falls to be carried forward to a subsequent accounting period under section 76(12) of ICTA, no account is to be taken of the amounts specified in subsection (3).

(3) Those amounts are amounts—

(a) brought forward from an earlier accounting period, and

(b) treated for the purposes of section 76 of ICTA as expenses payable which fall to be brought into account for the relevant accounting period in accordance with—

(i) Step 7 in section 76(7) of ICTA, as a result of a previous application of section 76(12) or (13) of that Act, or

(ii) Step 3 in section 76(7) of ICTA, as a result of section 391 of this Act (carry forward of surplus deficit).

(4) The amount of the qualifying life assurance business loss is—

(a) the amount which falls to be carried forward as mentioned in subsection (1)(b), or

(b) if less, 150% of the qualifying Chapter 4 expenditure in respect of which the relief was obtained.

1166 Amount of tax credit

(1) The amount of the life assurance company tax credit to which a company is entitled for an accounting period is 16% of the amount of the qualifying life assurance business loss for the period.

(2) The Treasury may by order replace the percentage for the time being specified in subsection (1) with a different percentage.

(3) An order under subsection (2) may contain incidental, supplemental, consequential and transitional provision and savings.

1167 Payment of tax credit etc

(1) The provisions mentioned in subsection (2) have effect in relation to a life assurance company tax credit subject to the modifications set out in subsection (3).

(2) The provisions referred to in subsection (1) are—

• section 1151(4) (payment of tax credit by officer of Revenue and Customs);

• section 1155 (supplementary provision about payment of tax credit);

• section 1156 (tax credit payment not income of company);

• section 1157 (qualifying expenditure excluded for capital gains purposes).

(3) The modifications referred to in subsection (1) are as follows—

(a) for any reference to a land remediation tax credit substitute a reference to a life assurance company tax credit, and

(b) in section 1157(2) for the reference to qualifying land remediation expenditure substitute a reference to qualifying Chapter 4 expenditure.

1168 Restriction on carrying forward expenses payable where tax credit claimed

(1) This section applies if a company claims a life assurance company tax credit to which it is entitled for an accounting period.

(2) For the purposes of section 76 of ICTA the amount which may be—

(a) carried forward from the accounting period under subsection (12) of that section, and

(b) brought into account in accordance with Step 7 in subsection (7) of that section,

is treated as reduced by the amount of the surrendered loss for the period.

(3) The “amount of the surrendered loss” for the period means the amount of the qualifying life assurance business loss in respect of which the land remediation tax credit is claimed for the period.

Chapter 5 Tax avoidance

1169 Artificially inflated claims for relief or tax credit

(1) To the extent that a transaction is attributable to arrangements entered into wholly or mainly for a disqualifying purpose, it is to be disregarded for the purposes mentioned in subsection (2).

(2) Those purposes are determining for an accounting period the amount of—

(a) any relief to which a company is entitled under Chapter 2,

(b) any land remediation tax credits to which a company is entitled under section 1151,

(c) any relief to which a company carrying on life assurance business is entitled under section 1161, and

(d) any life assurance company tax credits to which such a company is entitled under section 1164.

(3) Arrangements are entered into wholly or mainly for a “disqualifying purpose” if their main object, or one of their main objects, is to enable a company to obtain—

(a) relief under Chapter 2 to which the company would not otherwise be entitled or of a greater amount than that to which it would otherwise be entitled,

(b) a land remediation tax credit to which it would not otherwise be entitled or of a greater amount than that to which it would otherwise be entitled,

(c) relief under section 1161 to which it would not otherwise be entitled or of a greater amount than that to which it would otherwise be entitled, or

(d) a life assurance company tax credit to which it would not otherwise be entitled or of a greater amount than that to which it would otherwise be entitled.

(4) In this section “arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable.

Chapter 6 Supplementary

1170 “Staffing costs”

(1) For the purposes of this Part the staffing costs of a company are amounts to which any of subsections (2) to (5) applies.

(2) This subsection applies to an amount paid by the company to a director or an employee of the company which—

(a) is earnings consisting of money, and

(b) is paid because of the director’s or employee’s employment.

(3) This subsection applies to an amount paid by the company to a director or an employee of the company, other than an amount paid in respect of benefits in kind, if—

(a) the amount is paid in respect of expenses paid by the director or employee, and

(b) the amount is paid because of the director’s or employee’s employment.

(4) This subsection applies to secondary Class 1 national insurance contributions paid by the company.

(5) This subsection applies to contributions paid by the company to a pension fund operated for the benefit of directors or employees of the company.

(6) In subsection (5) “pension fund” means a scheme, fund or other arrangement established and maintained (whether in the United Kingdom or elsewhere) for the purpose of providing pension benefits.

For this purpose “scheme” includes a deed, agreement or series of agreements.

(7) In subsection (6) “pension benefits” means pensions, retirement annuities, allowances, lump sums, gratuities or other superannuation benefits (with or without subsidiary benefits).

1171 Staffing costs attributable to relevant land remediation

(1) This section applies for the purposes of this Part to identify the staffing costs of a company which are attributable to relevant land remediation.

(2) The costs which are so attributable are those paid to, or in respect of, directors or employees who are directly and actively engaged in relevant land remediation.

(3) Subsection (4) applies if a director (“D”) or employee (“E”) is partly engaged directly and actively in relevant land remediation.

(4) In that case—

(a) if the time D or E spends so engaged is less than 20% of D’s or E’s total working time, none of the staffing costs relating to D or E is treated as attributable to relevant land remediation,

(b) if the time D or E spends so engaged is more than 80% of D’s or E’s total working time, the whole of the staffing costs relating to D or E is treated as attributable to relevant land remediation, and

(c) in any other case, the appropriate proportion of the staffing costs relating to D or E is treated as attributable to relevant land remediation.

(5) Subsection (6) applies if persons provide services (such as secretarial or administrative services) in support of activities carried on by others.

(6) Those persons are not, as a result of providing those services, to be treated as themselves directly and actively engaged in those activities.

1172 Expenditure on materials

For the purposes of this Part expenditure on materials is attributable to relevant land remediation if the materials are employed directly in the relevant land remediation.

1173 Expenditure incurred because of contamination

(1) This section applies to identify cases in which the condition in section 1144(3) is to be treated as met (expenditure incurred because land in contaminated state).

(2) If the only reason that expenditure on the land is increased is that the land is in a contaminated state, the amount by which the expenditure is increased is to be treated as expenditure meeting the condition in section 1144(3).

(3) Subsection (4) applies if the main purpose of any works done, operations carried out or steps taken is—

(a) to prevent or minimise, or remedy or mitigate the effects of, any harm, or any pollution of controlled waters, by virtue of which the land is in a contaminated state, or

(b) to restore the land or waters to their former state.

(4) Expenditure on such works, operations or steps is to be treated as meeting the condition in section 1144(3).

(5) This section does not affect the width of the provision made by section 1144(3).

1174 Sub-contractor payments

(1) Sections 1175 and 1176 apply if a company makes a sub-contractor payment.

(2) They apply for the purpose of determining the amount of the payment which is “qualifying expenditure on sub-contracted land remediation” for the purposes of section 1144(5).

(3) In this Chapter, a “sub-contractor payment” means a payment made by a company to another person (“the sub-contractor”) in respect of relevant land remediation contracted out by the company to that person.

1175 “Qualifying expenditure on sub-contracted land remediation”: connected persons

(1) This section applies if—

(a) a company makes a sub-contractor payment,

(b) the company and the sub-contractor are connected, and

(c) in accordance with generally accepted accounting practice, the whole of the sub-contractor payment and all of the sub-contractor’s relevant expenditure have been brought into account in determining the sub-contractor’s profit or loss for a relevant period.

(2) The amount of the sub-contractor payment which is “qualifying expenditure on sub-contracted land remediation” is—

(a) the entire payment, or

(b) if less, an amount equal to the sub-contractor’s relevant expenditure.

(3) “Relevant expenditure” of the sub-contractor means expenditure that—

(a) is incurred by the sub-contractor in carrying on, on behalf of the company, the activities to which the sub-contractor payment relates,

(b) is not of a capital nature,

(c) is incurred on staffing costs or materials, and

(d) is not subsidised.

(4) “Relevant period” means a period—

(a) for which accounts are drawn up for the sub-contractor, and

(b) that ends not more than 12 months after the end of the company’s period of account in which the sub-contractor payment is, in accordance with generally accepted accounting practice, brought into account in determining the company’s profit or loss.

(5) In the following sections, which apply for the purpose of determining whether a sub-contractor’s expenditure meets the requirements of subsection (3)(c) and (d)—

(a) section 1170 (staffing costs), and

(b) section 1177 (subsidised expenditure),

references to a company are to be read as references to the sub-contractor.

(6) Any apportionment of expenditure of the company or the sub-contractor necessary for the purposes of this section is to be made on a just and reasonable basis.

1176 “Qualifying expenditure on sub-contracted land remediation”: other cases

(1) This section applies if—

(a) a company makes a sub-contractor payment, and

(b) the company and the sub-contractor are not connected persons.

(2) The amount of the sub-contractor payment which is “qualifying expenditure on sub-contracted land remediation” is the entire payment.

1177 “Subsidised expenditure”

(1) For the purposes of this Part a company’s expenditure is treated as subsidised to the extent that—

(a) a grant or subsidy is obtained in respect of the expenditure, or

(b) it is otherwise met directly or indirectly by a person other than the company.

(2) For the purposes of this a grant, subsidy or payment that is not allocated to particular expenditure is to be allocated to expenditure of the recipient on a just and reasonable basis.

1178 Persons having a “relevant connection” to a company

For the purposes of this Part a person has a “relevant connection” to a company in a case where the company’s land is in a contaminated state wholly or partly as a result of any thing done, or omitted to be done, by the person if—

(a) the person is or was connected to the company when any such thing is or was done, or omitted to be done, by the person,

(b) the person is or was connected to the company at the time when the land in question is or was acquired by the company, or

(c) the person is or was connected to the company at any time when relevant land remediation is or was undertaken (whether by the company itself or on its behalf).

1179 Other definitions

In this Part —

• “controlled waters”—

  (a)

  in relation to England and Wales, has the same meaning as in Part 3 of the Water Resources Act 1991 (c. 57),

  (b)

  in relation to Scotland, has the same meaning as in section 30A of the Control of Pollution Act 1974 (c. 40), and

  (c)

  in relation to Northern Ireland, means water in waterways and underground strata (as defined in Article 2(2) of the Water (Northern Ireland) Order 1999 (S.I. 1999/662 (N.I. 6)),

• “harm” means—

  (a)

  harm to the health of living organisms,

  (b)

  interference with the ecological systems of which any living organisms form part,

  (c)

  offence to the senses of human beings, or

  (d)

  damage to property,

• “land” means any estate, interest or rights in or over land,

• “pollution of controlled waters” means the entry into controlled waters of—

  (a)

  any poisonous, noxious or polluting matter, or

  (b)

  any solid waste matter,

• “substance” means any natural or artificial substance, whether in solid or liquid form or in the form of a gas or vapour, and

• “UK property business loss” has the same meaning as in section 392A of ICTA.