Finance Act 2012

Restrictions on writing-down allowances U.K.

2 U.K. In section 57(3) of CAA 2001 (available qualifying expenditure), after “section 218(1),” insert “ 218ZA(1) or (3), ”.

3 U.K. In section 214 of that Act (connected persons), after “218” insert “ (or, as the case may be, 218ZA(3)) ”.

4 U.K. In section 216 of that Act (sale and leaseback, etc), in subsection (1), after “218” insert “ (or, as the case may be, 218ZA(3)) ”.

5 (1) Section 218 of that Act (restriction on B's qualifying expenditure) is amended as follows. U.K.

(2) In subsection (1), for “section 214, 215 or 216” substitute “ section 214 or 216 ”.

(3) At the end insert—

“(5) This section is subject to section 218ZA(3).”

(4) Accordingly, in the heading of that section, insert at the end “ : section 214 or 216 ”.

6 U.K. After section 218 of that Act insert—

“218ZA Restrictions on writing-down allowances: section 215

(1) If this subsection applies as a result of section 215, all or part of B's expenditure under the relevant transaction is to be left out of account in determining B's available qualifying expenditure.

(2) The amount of expenditure to be left out of account is—

(a) such amount as would or would in effect cancel out the tax advantage mentioned in section 215 (whether that advantage is obtained by B or another person and whether it relates to the relevant transaction or something else), or

(b) if the amount found under paragraph (a) exceeds the whole of B's expenditure under the relevant transaction, the whole of that expenditure.

(3) But if subsection (1) applies as a result of section 215 and—

(a) section 218 also applies as a result of section 214 or 216, or

(b) section 228 also applies by virtue of an election under section 70I(11) or 227,

the amount of expenditure to be left out of account is the greater of X and Y.

(4) For the purposes of subsection (3)—

• “X” is the amount found under subsection (2), and

• “Y” is the amount by which B's expenditure under the relevant transaction exceeds D (as defined in section 218 or, as the case may be, section 228).

(5) If this subsection applies as a result of section 215—

(a) the allowance mentioned in subsection (7)(a) of that section is to be calculated using the rate that would be used without the tax advantage, or (as the case may be)

(b) the entitlement mentioned in subsection (7)(b) of that section is to be available as and when it would be available without the tax advantage.

(6) Subsection (5) applies whether or not section 218 also applies as a result of section 214 or 216, or section 228 also applies by virtue of an election under section 70I(11) or 227.”