Office of Public Sector Information
PART 3 continued CHAPTER 11 continued
(3) If—
(a) the person is liable to a balancing charge, and
(b) when the building was last in use as an industrial building, it was in use as an industrial building for the purposes of a trade which was carried on by the person but which has since been permanently discontinued,
the same deductions may be made from the amount of the balancing charge as may be made under section 105 of ICTA (deductions allowed in case of post-cessation receipts) from an amount chargeable to tax under section 103 or 104(1) of ICTA.
(4) Subsection (3) does not affect the making of any deduction allowed under any other provision of the Tax Acts.
(5) For the purposes of this section the permanent discontinuance of a trade does not include an event treated as a permanent discontinuance under section 113(1) or 337(1) of ICTA (change in persons carrying on a trade etc. and effect of company ceasing to trade etc.).
(6) In this section “trade”, in relation to a commercial building, includes a profession or vocation.
(1) This section applies if—
(a) a trade consists of or includes the working of a source of mineral deposits (within the meaning of item 7 of Table A in section 274),
(b) a balancing allowance falls to be made under this Part for the last chargeable period in which the trade is carried on,
(c) the event giving rise to the allowance is—
(i) the source of mineral deposits ceasing to be worked, or
(ii) the coming to an end of a foreign concession,
(d) the allowance is made for expenditure on a building which was constructed for occupation by, or for the welfare of, persons employed at or in connection with the working of the source of mineral deposits, and
(e) full effect cannot be given to the allowance because there are insufficient profits for that chargeable period.
(2) If this section applies, the person entitled to the allowance may claim that the balance of the allowance is to be given for the last preceding chargeable period, and so on for other preceding chargeable periods.
(3) But allowances are not to be given under subsection (2) for chargeable periods amounting in total to more than 5 years; but a proportionately reduced allowance may be given for a chargeable period of which part is required to make up the 5 years.
(4) In counting the 5 years, include any period for which an allowance might be made but cannot be given effect because there are insufficient profits.
(5) If this section applies to a company, no allowance may be given under this section so as to create or increase a loss in any accounting period.
(6) If this section applies to a company and a claim is made both under this section and under section 393A(1) of ICTA (relief for company trading losses)—
(a) effect is to be given to the claim under that section before this section is applied, and
(b) for the purposes of giving effect to the claim under that section, the allowance for which the claim under this section is made is to be disregarded.
(1) If the sum paid for the sale of the relevant interest in a building is attributable—
(a) partly to assets representing expenditure for which an allowance can be made under this Part, and
(b) partly to assets representing other expenditure,
only so much of the sum as on a just and reasonable apportionment is attributable to the assets referred to in paragraph (a) is to be taken into account for the purposes of this Part.
(2) Subsection (1) applies to other proceeds from a balancing event in respect of a building as it applies to a sum given for the sale of the relevant interest in the building.
(3) Subsection (1) does not affect any other provision of this Act requiring an apportionment of the proceeds of a balancing event.
(1) If—
(a) the relevant interest in a building is sold,
(b) related arrangements have been entered into, at or before the time when the sale price is fixed, which had the effect at that time of enhancing the value of the relevant interest, and
(c) the arrangements contain a provision which has an artificial effect on pricing (see subsection (4)),
the sum paid on the sale of the relevant interest is to be treated for the purposes of arriving at qualifying expenditure as reduced to what it would have been if the arrangements had not contained the provision having that artificial effect.
(2) If—
(a) qualifying expenditure is equal to a price paid on a sale of the relevant interest in a building,
(b) related arrangements have been entered into, at or before the time when the sale price is fixed, which had the effect at that time of enhancing the value of the relevant interest, and
(c) the arrangements contain a provision which has an artificial effect on pricing,
the proceeds from any balancing event subsequently occurring in relation to the building are to be treated for the purposes of this Part as reduced to what they would have been if the arrangements had not contained the provision having that artificial effect.
(3) “Related arrangements” means arrangements between two or more persons which relate—
(a) to an interest in or right over the building, or
(b) to other arrangements made with respect to such an interest or right;
and for this purpose it is immaterial whether the interest or right in question is granted by the person entitled to the relevant interest or another person.
(4) Arrangements contain a provision having an artificial effect on pricing to the extent that they go beyond what could reasonably have been regarded as required in comparable commercial transactions by the market conditions prevailing when the arrangements were entered into.
(5) “Comparable commercial transactions” means transactions—
(a) involving interests in or rights over buildings of the same kind as (or of a similar kind to) the building to which the arrangements relate, and
(b) made by persons dealing with each other at arm’s length in the open market.
(1) This section applies in relation to any period (“period of requisition”) for which compensation—
(a) is payable, or
(b) but for any agreement would be payable,
under section 2(1)(a) of the Compensation (Defence) Act 1939 (c. 75).
(2) This Part has effect in relation to the period of requisition as if the Crown had been in possession of the land for that period under a lease.
(3) If a person carrying on a trade is authorised by the Crown to occupy the land (or part of it) during the whole or a part of the period of requisition, this Part has effect as if the Crown had granted a sub-lease of the land (or that part of it) to the occupier.
(4) If subsection (2) or (3) applies, references in this Part to—
(a) the surrender of a leasehold interest,
(b) a leasehold interest being extinguished on the person entitled to it acquiring the interest which is reversionary on it, or
(c) the merger of a leasehold interest,
apply (with the necessary modifications) in relation to the lease under subsection (2) or the sub-lease under subsection (3).
(5) If the person who (subject to the rights of the Crown) is entitled to possession of the land pays any sum to—
(a) the Crown, or
(b) if subsection (3) applies, the occupier,
in respect of a building constructed on the land during the period of requisition, the sum is to be treated for the purposes of this Part as paid in consideration of the surrender of the lease or sub-lease (as the case may be).
(1) This section applies for the purposes of this Part if a lease is terminated.
(2) If, with the consent of the lessor, the lessee of a building remains in possession of the building after the termination without a new lease being granted to him the lease is treated as continuing so long as the lessee remains in possession.
(3) If on the termination a new lease is granted to the lessee as a result of the exercise of an option available to him under the terms of the first lease, the second lease is treated as a continuation of the first.
(4) If on the termination the lessor pays a sum to the lessee in respect of a building comprised in the lease, the lease is treated as if it had come to an end by surrender in consideration of the payment.
(5) If on the termination—
(a) another lease is granted to a different lessee, and
(b) in connection with the transaction that lessee pays a sum to the person who was the lessee under the first lease,
the two leases are to be treated as if they were the same lease which had been assigned by the lessee under the first lease to the lessee under the second lease in consideration of the payment.
(1) In this Part “lease” includes—
(a) an agreement for a lease if the term to be covered by the lease has begun, and
(b) any tenancy,
but does not include a mortgage (and “lessee”, “lessor” and “leasehold interest” are to be read accordingly).
(2) In the application of this Part to Scotland—
(a) “leasehold interest” (or “leasehold estate”) means the interest of a tenant in property subject to a lease, and
(b) any reference to an interest which is reversionary on a leasehold interest or on a lease is to be read as a reference to the interest of the landlord in the property subject to the leasehold interest or lease.
Capital Allowances Act 2001