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PART 12 continued CHAPTER 5 continued
(1) This section applies if—
(a) a person is entitled to an allowance for income tax purposes,
(b) that person enters into a tax agreement with the Inland Revenue for the tax year in which the allowance would be given effect, and
(c) no assessment giving effect to the allowance is made for that tax year.
(2) In this section “tax agreement” means an agreement in writing as to the extent to which the allowance in question is to be given effect for the tax year in question.
(3) If this section applies, the allowance is to be treated as if it had been given effect under an assessment—
(a) for the tax year for which the tax agreement is made, and
(b) to the extent set out in the tax agreement.
(4) A tax agreement may relate to any method by which allowances are given effect under this Act.
(1) This section applies if a company not resident in the United Kingdom is—
(a) within the charge to corporation tax in respect of one source of income, and
(b) within the charge to income tax in respect of another source.
(2) Allowances related to any source of income are to be given effect against income chargeable to the same tax as is chargeable on income from that source.
(1) Sections 568 to 570 apply for the purposes of Parts 3, 4, 5, 6 and 10.
(2) For the purposes of sections 568 to 570, the control test is met if—
(a) the buyer is a body of persons over whom the seller has control,
(b) the seller is a body of persons over whom the buyer has control,
(c) both the seller and the buyer are bodies of persons and another person has control over both of them, or
(d) the seller and the buyer are connected persons.
(3) In subsection (2) “body of persons” includes a partnership.
(4) For the purposes of sections 568 to 570, the tax advantage test is met if it appears that the sole or main benefit which might be expected to accrue from—
(a) the sale, or
(b) transactions of which the sale is one,
is the obtaining of a tax advantage by all or any of the parties under any provision of this Act except Part 2.
(5) Sections 568 to 570 do not apply if section 561 applies (transfer of a UK trade to a company in another member State).
(1) A sale of property that is not at market value is treated as being at market value if—
(a) the control test is met, or
(b) the tax advantage test is met.
(2) This section is subject to any election under section 569.
(1) The parties to a sale of property that is not for the alternative amount may elect for the sale to be treated as being for the alternative amount if—
(a) the control test is met or section 573 applies (transfers treated as sales), and
(b) the tax advantage test is not met.
(2) Subsection (1) is subject to section 570.
(3) The alternative amount is the lower of market value and—
(a) if the sale is relevant for the purposes of Part 3 or 10, the residue of the qualifying expenditure immediately before the sale;
(b) if the sale is relevant for the purposes of Part 5, the unrelieved qualifying expenditure immediately before the sale;
(c) if the sale is relevant for the purposes of Part 6—
(i) in a case where an allowance under Part 6 is given for the expenditure represented by the asset sold, nil;
(ii) in any other case, the qualifying expenditure represented by the asset sold.
(4) In subsection (3) “residue of qualifying expenditure”, “unrelieved qualifying expenditure” and “qualifying expenditure” have the same meaning as in the Part for the purposes of which the sale is relevant.
(5) If the sale—
(a) is relevant for the purposes of Part 3 or 10, and
(b) is treated as being for the residue of the qualifying expenditure immediately before the sale,
no balancing adjustment is to be made as a result of the sale under section 319 (building not an industrial building, etc. throughout) or 517 (building not a qualifying dwelling-house throughout).
(6) If, after the date of the sale, an event occurs as a result of which a balancing charge would have fallen to be made on the seller if—
(a) he had continued to own the property, and
(b) he had done all such things, and been allowed all such allowances, as were done by or allowed to the buyer,
the balancing charge is to be made on the buyer.
(7) All such assessments and adjustments of assessments are to be made as are necessary to give effect to the election.
(8) For the purposes of this section and section 570, a sale is relevant for the purposes of a Part if it is of property of a kind that is relevant for deciding whether an allowance or charge is made under that Part.
(1) Section 569(1) does not apply to a sale that is relevant for the purposes of Part 4.
(2) No election under section 569 may be made if—
(a) the circumstances of the sale or the parties to it mean that a relevant allowance or charge will not be capable of falling to be made, or
(b) the buyer is a dual resident investing company.
(3) In subsection (2)(a) “relevant allowance or charge” means an allowance or charge under Part 3, 5, 6, 9 or 10 which (ignoring the circumstances mentioned in subsection (2)(a)) would or might fall to be made, as a result of the sale, to or on any of the parties to it.
(4) If the sale is relevant for the purposes of Part 10, no election under section 569 may be made unless, at the time of the sale or any earlier time, both the seller and the buyer are or have been approved bodies (as defined in section 492).
(5) An election under section 569 must be made by notice to the Inland Revenue not later than 2 years after the sale.
(1) In this Act references to an asset of any kind (including a building or structure, plant or machinery or works) include a part of an asset.
(2) But subsection (1) does not apply if the context otherwise requires.
(1) In this Act references to the sale of property include—
(a) the exchange of property, and
(b) the surrender for valuable consideration of a leasehold interest (or, in Scotland, the interest of the tenant in property subject to a lease).
(2) For the purposes of subsection (1), any provision of this Act referring to a sale has effect with the necessary modifications, including, in particular, those in subsection (3).
(3) The modifications are that—
(a) references to the net proceeds of sale and to the price include the consideration for the exchange or surrender, and
(b) references to capital sums included in the net proceeds of sale or paid on a sale include so much of the consideration for the exchange or surrender as would have been a capital sum if it had been a money payment.
(4) Any reference in this Act (except in Part 6) to the time of any sale is to be read as a reference to whichever is the earlier of—
(a) the time of completion, and
(b) the time when possession is given.
(1) This section applies for the purposes of Parts 3, 4 and 10 and other provisions of this Act relevant to those Parts if—
(a) there is a transfer of the interest which is the relevant interest for the purposes of the Part in question, and
(b) the transfer is not a sale.
(2) The transfer is treated as a sale of the relevant interest.
(3) The sale is treated as being at market value, subject to any election under section 569 (election to treat sale as being for alternative amount).
(4) This section does not apply if section 561 applies (transfer of a UK trade to a company resident in another member State).
(1) In this Act “control” is used in the sense given in this section.
(2) In relation to a body corporate (“company A”), “control” means the power of a person (“P”) to secure—
(a) by means of the holding of shares or the possession of voting power in relation to that or any other body corporate, or
(b) as a result of any powers conferred by the articles of association or other document regulating that or any other body corporate,
that the affairs of company A are conducted in accordance with P’s wishes.
(3) In relation to a partnership, “control” means the right to a share of more than half of the assets, or of more than one half of the income, of the partnership.
(1) Section 839 of ICTA (how to tell whether persons are connected) applies for the purposes of this Act.
(2) Subsection (1) is subject to—
(a) section 156 (connected persons for purposes of deferring balancing charges in respect of ships),
(b) section 232 (connected persons for purposes of Chapter 17 of Part 2—anti-avoidance),
(c) section 246(2) (connected persons where additional VAT liability is incurred in anti-avoidance case), and
(d) section 266(5) (elections where predecessor and successor are connected persons),
(which give “connected person” an extended meaning).
(1) Subject to subsection (2), in this Act “the Inland Revenue” means any officer of the Board of Inland Revenue.
(2) In section 51(1) and (3)(a) (disclosure by or to Inland Revenue of information relating to first-year allowances in Northern Ireland cases) “the Inland Revenue” means the Board of Inland Revenue or any officer of the Board.
(3) In this Act “the Board of Inland Revenue” means the Commissioners of Inland Revenue (as to which, see in particular the Inland Revenue Regulation Act 1890 (c. 21)).
(1) In this Act—
“dual resident investing company” has the same meaning as in section 404 of ICTA (limitation of group relief in relation to certain dual resident companies);
“market value”, in relation to any asset, means the price the asset would fetch in the open market;
“the normal time limit for amending a tax return”, in relation to a tax year, means the first anniversary of the 31st January following the tax year;
“notice” means a notice in writing;
“property business” means a Schedule A business or an overseas property business;
“tax return” has the meaning given by section 3(3);
“tax year” means, in relation to income tax, a year for which any Act provides for income tax to be charged;
“the tax year 2001—02” means the tax year beginning on 6th April 2001 (and any corresponding expression in which two years are similarly mentioned is to be read in the same way).
(2) Any reference to the setting up, commencement or permanent discontinuance of—
(a) a trade,
(b) a property business,
(c) a profession, or
(d) a vocation,
includes, except where the contrary is expressly provided, the occurring of an event which, under any provision of the Income Tax Acts or Corporation Tax Acts, is to be treated as equivalent to the setting up, commencement or permanent discontinuance of a trade, property business, profession or vocation.
(3) Any reference in this Act to an allowance made includes an allowance which would be made but for an insufficiency of profits, or other income, against which to make it.
(4) For the purposes of this Act a person obtains a tax advantage if he—
(a) obtains an allowance or a greater allowance, or
(b) avoids a charge or secures the reduction of a charge.
(5) In Schedule 1—
(a) Part 1 gives the meaning of abbreviated references in this Act to Acts about tax, and
(b) Part 2 lists where expressions used in this Act are defined or otherwise explained.
Schedule 2 contains consequential amendments.
(1) This Act has effect—
(a) for income tax purposes, as respects allowances and charges falling to be made for chargeable periods ending on or after 6th April 2001, and
(b) for corporation tax purposes, as respects allowances and charges falling to be made for chargeable periods ending on or after 1st April 2001.
(2) References in this Act to a chargeable period to which this Act applies are to the chargeable periods given in subsection (1).
(3) Subsection (1) is subject to Schedule 3, which contains transitional provisions and savings.
Schedule 4 contains repeals.
This Act may be cited as the Capital Allowances Act 2001.
Capital Allowances Act 2001