Trades, Lessors and licensors

Capital Allowances Act 2001
2001 Chapter 2 - continued
Additional VAT rebates - continued

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	CHAPTER 11
	GIVING EFFECT TO ALLOWANCES AND CHARGES
352	Trades
	(1) An allowance or charge to which a person is entitled or liable under this Part is to be given effect in calculating the profits of that person's trade, by treating-
	(a) the allowance as an expense of the trade, and
	(b) the charge as a receipt of the trade.
	(2) In the case of a person who-
	(a) is entitled to an allowance or liable to a charge in respect of a commercial building, and
	(b) occupies the building in the course of a profession or vocation,
	the references in subsection (1) to a trade are to be read as references to the profession or vocation.
	(3) Subsection (1) is subject to the following provisions of this Chapter.
353	Lessors and licensors
	(1) This section applies if-
	(a) a person is entitled or liable to an allowance or charge for a chargeable period ("the relevant period"), but
	(b) his interest in the building in question is or was subject to a lease or a licence at the relevant time.
	(2) If the person's interest in the building is an asset of a Schedule A business carried on by him at any time in the relevant period, the allowance or charge is to be given effect in calculating the profits of that business for the relevant period, by treating-
	(a) the allowance as an expense of that business, and
	(b) the charge as a receipt of that business.
	(3) If the person's interest in the building is an asset of an overseas property business carried on by him at any time in the relevant period, the allowance or charge is to be given effect in calculating the profits of the overseas property business for the relevant period, by treating-
	(a) the allowance as an expense of that business, and
	(b) the charge as a receipt of that business.
	(4) If the person's interest in the building is not an asset of any property business carried on by him at any time in the relevant period, the allowance or charge is to be given effect by treating him as if he had been carrying on a Schedule A business in that period and as if-
	(a) the allowance were an expense of that business, and
	(b) the charge were a receipt of that business.
	(5) In subsection (1) "the relevant time" means-
	(a) in relation to an initial allowance, the time when the expenditure was incurred or any subsequent time before the building is used for any purpose;
	(b) in relation to a writing-down allowance, the end of the relevant period;
	(c) in relation to a balancing allowance or balancing charge, the time immediately before the event giving rise to the allowance or charge.
354	Buildings temporarily out of use
	(1) This section applies if a person is entitled to an allowance or liable to a charge for a chargeable period during which the building is treated as an industrial building under section 285 (building still industrial building despite temporary disuse).
	(2) If, when the building was last in use as an industrial building-
	(a) it was in use for the purposes of a trade which has since been permanently discontinued, or
	(b) the relevant interest in the building was subject to a lease or a licence which has since come to an end,
	section 353(4) applies to the person as if the relevant interest were subject to a lease or licence at the relevant time.
	(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.
355	Buildings for miners etc.: carry-back of balancing allowances
	(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.



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Prepared 2 May 2001