Office of Public Sector Information
PART 2 continued CHAPTER 3 continued
(1) This section applies to expenditure if a person carrying on a qualifying activity has incurred it in taking required safety precautions in respect of a sports ground—
(a) which is of a kind described in section 1(1) of the Safety of Sports Grounds Act 1975 (c. 52) but in respect of which no designation order under that section is in force at the time when he takes those precautions, and
(b) which he uses for the purposes of the qualifying activity,
and the expenditure is not incurred in respect of a sports ground stand which is within section 31(1)(a).
(2) A person takes required safety precautions in respect of the sports ground if he takes steps which the relevant local authority certify would have fallen within section 30(2) or (3) if—
(a) a designation order under section 1 of the 1975 Act had then been in force, and
(b) a safety certificate had then been issued or applied for under the 1975 Act.
(3) Any provision of regulations made under section 6(1)(b) of the 1975 Act (power of local authorities to charge fees) applies, with the necessary modifications, to the issue of a certificate for the purposes of subsection (2) as it applies to the issue of a safety certificate.
(4) In subsection (2)—
(a) “the relevant local authority” means the local authority for the area in which the sports ground is situated, and
(b) “local authority” has the same meaning as in the 1975 Act.
(1) This section applies to expenditure if—
(a) it is incurred by an individual or partnership of individuals in connection with the provision for, or for use by, the individual, or any of the individuals, of a security asset,
(b) the individual or partnership is carrying on a relevant qualifying activity, and
(c) the special threat conditions are met.
(2) The special threat conditions are that—
(a) the asset is provided or used to meet a threat which—
(i) is a special threat to the individual’s personal physical security, and
(ii) arises wholly or mainly because of the relevant qualifying activity, and
(b) the person incurring the expenditure—
(i) has the sole object of meeting that threat in incurring that expenditure, and
(ii) intends the asset to be used solely to improve personal physical security.
(3) If—
(a) the person incurring the expenditure intends the asset to be used solely to improve personal physical security, but
(b) there is another use which is incidental to improving personal physical security,
that other use is ignored for the purposes of this section.
(4) The fact that an asset improves the personal physical security of any member of the family or household of the individual concerned, as well as that of the individual, does not prevent this section from applying.
(5) If—
(a) the asset is not intended to be used solely to improve personal physical security, but the expenditure incurred on it would otherwise be expenditure to which this section applies, and
(b) the person incurring the expenditure intends the asset to be used partly to improve personal physical security,
this section applies only to the proportion of the expenditure attributable to the intended use to improve personal physical security.
(6) In this section “security asset” means an asset which improves personal security; and here “asset”—
(a) does not include—
(i) a car, ship or aircraft, or
(ii) a dwelling or grounds appurtenant to a dwelling, but
(b) subject to paragraph (a), includes equipment, a structure (such as a wall) and an asset which becomes fixed to land.
(7) Section 81 (extended meaning of “car”) does not apply in relation to subsection (6)(a).
(8) In this section “relevant qualifying activity” means a qualifying activity consisting of—
(a) a trade,
(b) an ordinary Schedule A business,
(c) a furnished holiday lettings business,
(d) an overseas property business, or
(e) a profession or vocation.
(1) Expenditure is not qualifying expenditure if it is incurred by—
(a) a member of the House of Commons,
(b) a member of the Scottish Parliament,
(c) a member of the National Assembly for Wales, or
(d) a member of the Northern Ireland Assembly,
in or in connection with the provision or use of residential or overnight accommodation for the purpose given in subsection (2).
(2) The purpose is enabling the member to perform the duties of a member of the body in or about—
(a) the place where the body sits, or
(b) the constituency or region for which the member has been returned.
(1) This section applies if a person is carrying on a qualifying activity consisting of—
(a) an ordinary Schedule A business,
(b) an overseas property business, or
(c) special leasing of plant or machinery.
(2) The person’s expenditure is not qualifying expenditure if it is incurred in providing plant or machinery for use in a dwelling-house.
(3) If plant or machinery is provided partly for use in a dwelling-house and partly for other purposes, such apportionment of the expenditure incurred in providing that plant or machinery is to be made for the purposes of subsection (2) as is just and reasonable.
(1) Subsection (2) applies in relation to a qualifying activity consisting of an employment or office.
(2) Expenditure is qualifying expenditure only if the plant or machinery is necessarily provided for use in the performance of the duties of the employment or office.
(3) Subsection (2) is subject to section 80 (vehicles provided for purposes of employment or office).
(1) Expenditure incurred by a person in providing plant or machinery for the purposes of a qualifying activity is not qualifying expenditure if it appears—
(a) that during the period during which the plant or machinery will be used for the purposes of the qualifying activity sums are, or are to be, payable to that person directly or indirectly, and
(b) that those sums are in respect of, or take account of, the whole of the depreciation of the plant or machinery resulting from its use for those purposes.
(2) Subsection (1) does not apply if the sums fall to be taken into account as income of the person or in calculating the profits of a qualifying activity carried on by him.
Expenditure is not qualifying expenditure if it is incurred on—
(a) animals or other creatures to which Schedule 5 to ICTA (treatment of farm animals etc. for purposes of Case I of Schedule D) applies, or
(b) shares in such animals or creatures.
A first-year allowance is not available unless the qualifying expenditure is first-year qualifying expenditure under—
| section 40 | expenditure incurred for Northern Ireland purposes by small or medium-sized enterprises, |
| section 44 | expenditure incurred by small or medium-sized enterprises, or |
| section 45 | ICT expenditure incurred by small enterprises. |
(1) Expenditure is first-year qualifying expenditure if—
(a) it is incurred on or before 11th May 2002,
(b) it is incurred by a small or medium-sized enterprise,
(c) it is incurred on the provision of plant or machinery for use primarily in Northern Ireland, and
(d) it is not excluded by—
(i) section 41 (miscellaneous exclusions from this section),
(ii) section 42 (plant or machinery partly for use outside Northern Ireland), or
(iii) section 46 (general exclusions).
(2) This section is subject to section 43 (effect of plant or machinery subsequently being primarily for use outside Northern Ireland).
(1) Expenditure is not first-year qualifying expenditure under section 40 if—
(a) it is long-life asset expenditure,
(b) it is expenditure on the provision of an aircraft or hovercraft, or
(c) it is expenditure on the provision of a goods vehicle for the purposes of a trade which consists primarily of the conveyance of goods.
(2) Expenditure is not first-year qualifying expenditure under section 40 if it is incurred on the provision of plant or machinery for use primarily in—
(a) agriculture, fishing or fish farming, or
(b) any relevant activity carried out in relation to agricultural produce, fish or any fish product for the purpose of bringing it to market,
unless it is authorised for the purposes of this section by the Department of Agriculture and Rural Development in Northern Ireland.
(3) An authorisation given by the Department—
(a) may be given either generally or specially, and
(b) may in any case be absolute or conditional;
and, if the authorisation is given generally, it may be modified by the Department.
(4) An authorisation is given specially if it is given so as to apply only to a specified item of expenditure or a specified person; otherwise, it is given generally.
(5) In this section—
“agriculture” and “agricultural produce” have the same meaning as in section 6 of the European Communities Act 1972 (c. 68),
“fish” includes shellfish,
“fish farming” means the intensive rearing, on a commercial basis, of fish intended for human consumption,
“fishing” means a trade, or part of a trade, which consists of the catching or taking of fish,
“goods vehicle” has the same meaning as in the Road Traffic (Northern Ireland) Order 1995 (S.I.1995/2994 (N.I.18)),
“hovercraft” has the same meaning as in the Hovercraft Act 1968 (c. 59), and
“relevant activity” means transportation, storage, preparation, processing or packaging.
(1) Expenditure on plant or machinery is not first-year qualifying expenditure under section 40 if—
(a) at the time when it is incurred, the person incurring it intends the plant or machinery to be used partly outside Northern Ireland, and
(b) the main benefit, or one of the main benefits, which could reasonably be expected to arise from the relevant arrangements is the obtaining of a first-year allowance, or a greater first-year allowance, in respect of the part of the expenditure that is attributable to that intended use outside Northern Ireland.
(2) For the purposes of subsection (1)—
(a) “the relevant arrangements” means—
(i) the transaction under which the expenditure is incurred, and
(ii) any scheme or arrangements of which that transaction forms part, and
(b) the part of the expenditure that is attributable under subsection (1)(b) is to be determined on a just and reasonable basis.
(1) Expenditure on the provision of plant or machinery is to be treated as never having been first-year qualifying expenditure under section 40 if, at any relevant time—
(a) the primary use to which the plant or machinery is put is a use outside Northern Ireland, or
(b) the plant or machinery is held for use otherwise than primarily in Northern Ireland.
(2) In subsection (1) “relevant time” means a time which—
(a) falls within the relevant period, and
(b) is a time when the plant or machinery is owned by—
(i) the person who incurred the expenditure, or
(ii) a person who is, or at any time in that period has been, connected with that person.
(3) “The relevant period” means—
(a) if the expenditure concerned exceeds £3.5 million, the period of 5 years beginning with the date of the incurring of that expenditure;
(b) in any other case, the period of 2 years beginning with that date.
(4) All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (1).
(5) If a person who has made a return becomes aware that, after making it, anything in it has become incorrect because of the operation of this section, he must give notice to the Inland Revenue specifying how the return needs to be amended.
(6) The notice must be given within 3 months beginning with the day on which the person first became aware that anything in the return had become incorrect because of the operation of this section.
(1) Expenditure is first-year qualifying expenditure if—
(a) it is incurred by a small or medium-sized enterprise, and
(b) it is not excluded by subsection (2) or section 46 (general exclusions).
(2) Long-life asset expenditure is not first-year qualifying expenditure under subsection (1).
(1) Expenditure is first-year qualifying expenditure if—
(a) it is incurred on or before 31st March 2003,
(b) it is incurred by a small enterprise,
(c) it is expenditure on information and communications technology, and
(d) it is not excluded by section 46 (general exclusions).
(2) “Expenditure on information and communications technology” means expenditure on items within any of the following classes.
Class A. Computers and associated equipment
This class covers—
(a) computers,
(b) peripheral devices designed to be used by being connected to or inserted in a computer,
(c) equipment (including cabling) for use primarily to provide a data connection between—
(i) one computer and another, or
(ii) a computer and a data communications network, and
(d) dedicated electrical systems for computers.
For this purpose “computer” does not include computerised control or management systems or other systems that are part of a larger system whose principal function is not processing or storing information.
Class B. Other qualifying equipment
This class covers—
(a) wireless application protocol telephones,
(b) third generation mobile telephones,
(c) devices designed to be used by being connected to a television set and capable of receiving and transmitting information from and to data networks, and
(d) other devices—
(i) substantially similar to those within paragraphs (a), (b) and (c), and
(ii) capable of receiving and transmitting information from and to data networks.
This is subject to any order under subsection (3).
Class C. Software
This class covers the right to use or otherwise deal with software for the purposes of any equipment within Class A or B.
(3) The Treasury may make provision by order—
(a) further defining the kinds of equipment within Class B, or
(b) adding further kinds of equipment to that class.
(1) Expenditure within any of the general exclusions in subsection (2) is not first-year qualifying expenditure under—
section 40 (expenditure incurred for Northern Ireland purposes by small or medium-sized enterprises),
section 44 (expenditure incurred by small or medium-sized enterprises), or
section 45 (ICT expenditure incurred by small enterprises).
(2) The general exclusions are—
General exclusion 1
The expenditure is incurred in the chargeable period in which the qualifying activity is permanently discontinued.
General exclusion 2
The expenditure is incurred on the provision of a car (as defined by section 81).
General exclusion 3
The expenditure is of the kind described in section 94 (ships).
General exclusion 4
The expenditure is of the kind described in section 95 (railway assets).
General exclusion 5
The expenditure would be long-life asset expenditure but for paragraph 20 of Schedule 3 (transitional provisions).
General exclusion 6
The expenditure is on the provision of plant or machinery for leasing (whether in the course of a trade or otherwise).
For this purpose, the letting of a ship on charter, or of any other asset on hire, is to be regarded as leasing (whether or not it would otherwise be so regarded).
General exclusion 7
The circumstances of the incurring of the expenditure are that—
(a) the provision of the plant or machinery on which the expenditure is incurred is connected with a change in the nature or conduct of a trade or business carried on by a person other than the person incurring the expenditure, and
(b) the obtaining of a first-year allowance is the main benefit, or one of the main benefits, which could reasonably be expected to arise from the making of the change.
General exclusion 8
Either of the following sections applies—
section 13 (use for qualifying activity of plant or machinery provided for other purposes);
section 14 (use for qualifying activity of plant or machinery which is a gift).
This is subject to section 161 (pre-trading expenditure on mineral exploration and access).
(1) Use this section to decide whether expenditure incurred by a company is, for the purposes of this Chapter, incurred by—
(a) a small or medium-sized enterprise, or
(b) a small enterprise.
(2) The expenditure is incurred by a small or medium-sized enterprise if the company—
(a) qualifies (or is treated as qualifying) as small or medium-sized under the relevant companies legislation in relation to the financial year of the company in which the expenditure is incurred, and
(b) is not a member of a large group at the time when the expenditure is incurred.
(3) The expenditure is incurred by a small enterprise if the company—
(a) qualifies (or is treated as qualifying) as small under the relevant companies legislation in relation to the financial year of the company in which the expenditure is incurred, and
(b) is not a member of a large or medium-sized group at the time when the expenditure is incurred.
(4) Except in the case of a company formed and registered in Northern Ireland—
(a) “the relevant companies legislation” means section 247 of the Companies Act 1985 (c. 6), and
(b) “financial year” has the same meaning as in Part VII of the 1985 Act.
(5) In the case of such a company—
(a) “the relevant companies legislation” means Article 255 of the Companies (Northern Ireland) Order 1986 (S.I.1986/1032 (N.I.6)), and
(b) “financial year” has the same meaning as in Part VIII of the 1986 Order.
(6) “Company” means—
(a) a company, or an oversea company, within the meaning of the 1985 Act, or
(b) a company, or a Part XXIII company, within the meaning of the 1986 Order.
(1) Use this section to decide whether expenditure incurred by a business is, for the purposes of this Chapter, incurred by—
(a) a small or medium-sized enterprise, or
(b) a small enterprise.
(2) In this section “business” means—
(a) an individual,
(b) a partnership of which all the members are individuals,
(c) a registered friendly society within the meaning of Chapter II of Part XII of ICTA, or
(d) a body corporate which is not a company but is within the charge to corporation tax.
(3) The expenditure is incurred by a small or medium-sized enterprise if—
(a) the expenditure is incurred for the purposes of a qualifying activity carried on by the business, and
(b) the business passes the hypothetical company test, in relation to that expenditure, as a small or medium-sized company.
(4) The expenditure is incurred by a small enterprise if—
(a) the expenditure is incurred for the purposes of a qualifying activity carried on by the business, and
(b) the business passes the hypothetical company test, in relation to that expenditure, as a small company.
(5) To apply the hypothetical company test, assume that—
(a) the qualifying activity is carried on by a company (“the hypothetical company”),
(b) every trade, business, profession or vocation carried on by the business is carried on by the business as part of that activity,
(c) the financial years of the hypothetical company coincide with the chargeable periods of the business, and
(d) accounts of the hypothetical company for any relevant chargeable period have been duly drawn up as if that period were a financial year of the company.
(6) The business passes the hypothetical company test as a small or medium-sized company in relation to the expenditure in question if, on the assumptions in subsection (5), the company would qualify (or be treated as qualifying) as small or medium-sized under the relevant companies legislation in relation to the financial year in which the expenditure is assumed to be incurred.
(7) The business passes the hypothetical company test as a small company in relation to the expenditure in question if, on the assumptions in subsection (5), the company would qualify (or be treated as qualifying) as small under the relevant companies legislation in relation to the financial year in which the expenditure is assumed to be incurred.
(8) Except in the case of a business carrying on a qualifying activity wholly or mainly in Northern Ireland—
(a) “the relevant companies legislation” means section 247 of the Companies Act 1985 (c. 6), and
(b) “financial year” has the same meaning as in Part VII of that Act;
and the reference in subsection (5)(d) to accounts being duly drawn up is to their being drawn up in accordance with that Act.
(9) In the case of such a business—
(a) “the relevant companies legislation” means Article 255 of the Companies (Northern Ireland) Order 1986 (S.I.1986/1032 (N.I.6)), and
(b) “financial year” has the same meaning as in Part VIII of that Order;
and the reference in subsection (5)(d) to accounts being duly drawn up is to their being drawn up in accordance with that Order.
(1) Use this section to decide whether, for the purposes of section 47, a company is—
(a) a member of a large group, or
(b) a member of a large or medium-sized group.
(2) Subject to subsection (4), a company is a member of a large group at the time when any expenditure is incurred if—
(a) it is at that time the parent undertaking of a group which does not qualify as small or medium-sized in relation to the financial year of the parent undertaking in which that time falls, or
(b) it is at that time a subsidiary undertaking in relation to the parent undertaking of such a group.
(3) Subject to subsection (4), a company is a member of a large or medium-sized group at the time when any expenditure is incurred if—
(a) it is at that time the parent undertaking of a group which does not qualify as small in relation to the financial year of the parent undertaking in which that time falls, or
(b) it is at that time a subsidiary undertaking in relation to the parent undertaking of such a group.
(4) If, at the time when any expenditure is incurred by a company, any arrangements exist which are such that, had effect been given to them immediately before that time, the company or a successor of the company—
(a) would, at that time, have been a member of a large group, or
(b) would, at that time, have been a member of a large or medium-sized group,
the company incurring the expenditure is to be treated as a member of a large group or (as the case may be) a large or medium-sized group at that time.
(5) For the purposes of subsections (2) and (3), the question whether—
(a) a group qualifies as small or medium-sized, or
(b) a group qualifies as small,
is to be decided by reference to the relevant companies legislation (but reading references in that legislation to a parent company as references to a parent undertaking).
(6) In subsection (5) “the relevant companies legislation” means—
(a) except in the case of a company formed and registered in Northern Ireland, section 249 of the Companies Act 1985 (c. 6);
(b) in the case of such a company, Article 257 of the Companies (Northern Ireland) Order 1986 (S.I.1986/1032 (N.I.6)).
(7) For the purposes of subsection (4) a company is the successor of another if—
(a) it carries on a trade which, in whole or in part, the other company has ceased to carry on, and
(b) the circumstances are such that section 343 of ICTA (company reconstructions without a change of ownership) applies in relation to the two companies as the predecessor and the successor within the meaning of that section,
and “arrangements” means arrangements of any kind (whether or not in writing or legally enforceable).
(8) In this section “financial year”, “group”, “parent undertaking” and “subsidiary undertaking” have the same meaning as in—
(a) except in the case of a company formed and registered in Northern Ireland, Part VII of the 1985 Act;
(b) in the case of such a company, Part VIII of the 1986 Order.
Capital Allowances Act 2001