Finance Bill

Session 2012 - 13
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Finance Bill

Finance Bill
Schedule 9 — Capital allowances for plant and machinery: anti-avoidance
276

subsidiary of that company, first began to carry on activities of the kind
mentioned in section 303(1)(ka) of ITA 2007 before that day.
      (3)
Until such time as section 1 of the Co-operative and Community Benefit
Societies and Credit Unions Act 2010 comes into force, section 309A(6) of
ITA 2007 (as inserted by paragraph 10 of this Schedule) has effect as if for
5
paragraphs (b) and (c) there were substituted—
“(b)
a society registered under the Industrial and Provident
Societies Act 1965,”.
Schedule 9
Section 42

Capital allowances for plant and machinery: anti-avoidance
10
Transactions to obtain allowances
1
For section 215 of CAA 2001 substitute—
“215
Transactions to obtain tax advantages
(1)
Allowances under this Part are restricted under the applicable
sections if B enters into a relevant transaction with S that either—
15
(a)
has an avoidance purpose, or
(b)
is part of, or occurs as a result of, a scheme or arrangement
that has an avoidance purpose.
(2)
Subsection (1)(b) may be satisfied—
(a)
whether the scheme or arrangement was made before or after
20
the relevant transaction was entered into, and
(b)
whether or not the scheme or arrangement is legally
enforceable.
(3)
A transaction, scheme or arrangement has an “avoidance purpose” if
the main purpose, or one of the main purposes, of a party in entering
25
into the transaction, scheme or arrangement is to enable a person to
obtain a tax advantage under this Part that would not otherwise be
obtained.
(4)
The reference in subsection (3) to obtaining a tax advantage that
would not otherwise be obtained includes obtaining an allowance
30
that is in any way more favourable to a person than the one that
would otherwise be obtained.
(5)
If the tax advantage is of a kind described in subsection (7), “the
applicable sections” are sections 217 and 218ZA(5).
(6)
Otherwise, “the applicable sections” are sections 217 and 218ZA(1)
35
or, as the case may be, 218ZA(3).
(7)
The kinds of tax advantage are—
(a)
that an allowance to which B is entitled for a chargeable
period is calculated using a percentage rate that is higher
than the one that would otherwise be used, or
40

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Schedule 9 — Capital allowances for plant and machinery: anti-avoidance
277

(b)
that B is entitled to an allowance in respect of an amount of
capital expenditure sooner than B would otherwise be
entitled to it.
(8)
If a transaction, scheme or arrangement involves—
(a)
a tax advantage of a kind described in subsection (7), and
5
(b)
a tax advantage not of such a kind,

subsections (5) and (6) have effect separately in relation to each tax
advantage.”
Restrictions on writing-down allowances
2
In section 57(3) of CAA 2001 (available qualifying expenditure), after
10
“section 218(1),” insert “218ZA(1) or (3),”.
3
In section 214 of that Act (connected persons), after “218” insert “(or, as the
case may be, 218ZA(3))”.
4
In section 216 of that Act (sale and leaseback, etc), in subsection (1), after
“218” insert “(or, as the case may be, 218ZA(3))”.
15
5     (1)
Section 218 of that Act (restriction on B’s qualifying expenditure) is
amended as follows.
      (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).”
20
      (4)
Accordingly, in the heading of that section, insert at the end “: section 214 or
216”.
6
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
25
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
30
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.
35
(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
40
and Y.
(4)
For the purposes of subsection (3)—

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Schedule 9 — Capital allowances for plant and machinery: anti-avoidance
278

“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—
5
(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
10
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.”
Restriction of exception for manufacturers and suppliers
15
7     (1)
Section 230 of CAA 2001 (exception for manufacturers and suppliers), as
amended by section 41 of this Act, is amended as follows.
      (2)
For subsection (1) substitute—
“(1)
The restrictions in sections 217 and 218 do not apply in relation to
any plant or machinery if—
20
(a)
the relevant transaction is within section 213(1)(a) or (b),
(b)
the case does not fall within section 215, and
(c)
the conditions in subsection (3) are met.”
      (3)
Omit subsection (2).
Relevant transactions
25
8
After section 268D of CAA 2001 insert—
“268E
Meaning of “assigns”
(1)
For the purposes of this Part—
(a)
a person (“A”) is taken to assign the benefit of a contract, or
rights under a contract, to another person (“B”) whenever B
30
becomes entitled, and A ceases to be entitled, to the benefit or
rights (whether by assignment, novation, variation or
replacement of the contract, by operation of law or
otherwise), and
(b)
references to an assignment are to be read accordingly.
35
(2)
Any reference in this Part to the benefit of a contract or to rights
under a contract includes a reference to part of the benefit of a
contract or to part of the rights under a contract.”
Commencement
9     (1)
The amendments made by paragraphs 1 to 7 of this Schedule have effect in
40
relation to expenditure of B’s that is incurred on or after the start date
(regardless of when the relevant transaction was entered into).

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Schedule 10 — Plant and machinery allowances: fixtures
279

      (2)
The amendment made by paragraph 8 of this Schedule has effect in relation
to expenditure that is incurred on or after the start date.
      (3)
The start date is—
(a)
1 April 2012, for corporation tax purposes, and
(b)
6 April 2012, for income tax purposes.
5
Schedule 10
Section 43

Plant and machinery allowances: fixtures
Introductory
1
CAA 2001 is amended as follows.
Changes in ownership
10
2
After section 187 insert—
“187A
Effect of changes in ownership of a fixture
(1)
This section applies if—
(a)
a person (“the current owner”) is treated as the owner of a
fixture as a result of incurring capital expenditure (“new
15
expenditure”) on its provision for the purposes of a
qualifying activity carried on by the current owner,
(b)
the plant or machinery is treated as having been owned at a
relevant earlier time by a person as a result of incurring other
capital expenditure (“historic expenditure”) on its provision
20
for the purposes of a qualifying activity carried on by that
person,
(c)
the plant or machinery is within paragraph (b) otherwise
than as a result of section 538 (contribution allowances for
plant and machinery), and
25
(d)
a person mentioned in paragraph (b) was entitled to claim an
allowance under this Part in respect of the historic
expenditure.
(2)
In this section—
“the past owner” means—
30
(a)
the person mentioned in paragraph (d) of subsection
(1), or
(b)
if there is more than one amount of historic
expenditure in respect of which a person was entitled
to claim as mentioned in that paragraph, the person
35
by whom expenditure was incurred most recently;
“relevant earlier time” has the meaning given by section 187B(4)
and (5).
(3)
In determining the current owner’s qualifying expenditure, the new
expenditure is to be treated as nil if—
40
(a)
the pooling requirement is not satisfied,
(b)
the fixed value requirement applies but is not satisfied, or

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Schedule 10 — Plant and machinery allowances: fixtures
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(c)
the disposal value statement requirement applies but is not
satisfied,

in relation to the past owner.
(4)
The pooling requirement is that—
(a)
the historic expenditure has been allocated to a pool in a
5
chargeable period beginning on or before the day on which
the past owner ceases to be treated as the owner of the fixture,
or
(b)
a first-year allowance has been claimed in respect of that
expenditure (or any part of it).
10
(5)
The fixed value requirement applies if the past owner is or has been
required (as a result of having made a claim in respect of the historic
expenditure) to bring the disposal value of the plant or machinery
into account in accordance with item 1, 5 or 9 of the Table in section
196.
15
(6)
The fixed value requirement is that either—
(a)
a relevant apportionment of the apportionable sum has been
made, or
(b)
the current owner has obtained the statements mentioned in
subsection (8), or copies of them, (directly or indirectly) from
20
the persons who made them and the case is one where the
purchaser from the past owner or, as the case may be, lessee
was not entitled to claim an allowance under this Part in
respect of capital expenditure incurred on the fixture.
(7)
For the purposes of subsection (6)(a) a relevant apportionment of the
25
apportionable sum is made if—
(a)
the tribunal determines the part of the apportionable sum
that constitutes the disposal value, on an application made by
one of the affected parties before the end of the relevant 2
year period, or
30
(b)
an election is made, in respect of the apportionable sum, by
the affected parties jointly—
(i)
before the end of the relevant 2 year period, or
(ii)
if an application is made as mentioned in paragraph
(a) and not determined or withdrawn by the end of
35
that period, before that application is determined or
withdrawn.
(8)
The statements referred to in subsection (6)(b) are—
(a)
a written statement made by the purchaser from the past
owner or, as the case may be, lessee, that the requirement of
40
subsection (6)(a) has not been met and is no longer capable of
being met, and
(b)
a written statement made by the past owner of the amount of
the disposal value that the past owner has in fact brought into
account.
45
(9)
In subsections (6) to (8)—
(a)
in a case falling within item 1 or 9 of the Table in section 196—
“affected parties” means the past owner and the
purchaser from the past owner;

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Schedule 10 — Plant and machinery allowances: fixtures
281

“apportionable sum” means the sale price;
“election” means an election under section 198;
“relevant 2 year period” means the period of 2 years
beginning with the date when the purchaser from the
past owner acquires the qualifying interest;
5
(b)
in a case falling within item 5 of that Table—
“affected parties” means the past owner and the lessee;
“apportionable sum” means the capital sum given by
the lessee for the lease;
“election” means an election under section 199;
10
“relevant 2 year period” means the period of 2 years
beginning with the date when the lessee is granted
the lease.
(10)
The disposal value statement requirement applies if the past owner
is or has been required (as a result of having made a claim in respect
15
of the historic expenditure) to bring the disposal value of the plant or
machinery into account in accordance with item 2 or 3 of the Table in
section 196 or in accordance with item 7 of the Table in section 61.
(11)
The disposal value statement requirement is—
(a)
that the past owner has, no later than 2 years after the date
20
when the past owner ceased to own the plant or machinery,
made a written statement of the amount of the disposal value
that the past owner is or has been required to bring into
account, and
(b)
the current owner has obtained that statement or a copy of it
25
(directly or indirectly) from the past owner.
187B
Section 187A: supplementary provision
(1)
It is for the current owner to show—
(a)
whether the fixed value requirement applies and, if so, is
satisfied, and
30
(b)
whether the disposal value statement requirement applies
and, if so, is satisfied,

and, for this purpose, to provide an officer of Revenue and Customs,
on request, with a copy of any tribunal decision, election or
statement by reason of which a requirement mentioned in paragraph
35
(a) or (b) is satisfied.
(2)
Where—
(a)
the fixed value requirement applies and is met by reason of
section 187A(6)(b) being satisfied, or
(b)
the disposal value requirement applies,
40

subsections (2) and (4) of section 200 apply in relation to the making
of a statement within section 187A(8)(b) or (11)(a) and an amount
specified in such a statement, as they apply in relation to an election
and an amount specified in an election.
(3)
For the purposes of section 187A, the current owner and the past
45
owner may be the same person.
(4)
In that section “relevant earlier time” means (subject to subsection
(5)) any time which falls before the earliest time when the current

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Schedule 10 — Plant and machinery allowances: fixtures
282

owner is treated as owning the plant or machinery as a result of
incurring the new expenditure.
(5)
If, before the earliest time when the current owner is treated as
owning the plant or machinery as a result of incurring the new
expenditure—
5
(a)
any person has ceased to own the plant or machinery as a
result of a sale,
(b)
the sale was not a sale of the plant or machinery as a fixture,
and
(c)
the buyer and seller were not connected persons at the time
10
of the sale,

the relevant earlier time does not include any time before the seller
ceased to own the plant or machinery.
(6)
Nothing in section 187A(3) affects the disposal value (if any) which
falls to be brought into account by the past owner (as a result of
15
having made a claim in respect of the historic expenditure).
(7)
Expressions used in this section have the same meaning as in section
187A.”
3
In section 198 (election to apportion sale price on sale of qualifying
interest)—
20
(a)
in subsection (1), after “item 1” insert “or 9”, and
(b)
in subsection (2)(a), after “item 1” insert “or (as the case may be) 9”.
4     (1)
Section 201 (elections under sections 198 and 199: procedure) is amended as
follows.
      (2)
In subsection (1), at the end insert—
25
“But this is subject to subsection (1A).”
      (3)
After that subsection insert—
“(1A)
Where—
(a)
the requirement of subsection (6) of section 187A (effect of
changes in ownership of fixture: fixed value requirement)
30
applies, or may in future apply by reason of a person being
required to bring the disposal value of plant and machinery
into account in accordance with item 1, 5 or 9 of the Table in
section 196,
(b)
an application is made to the tribunal for the purposes of
35
section 187A(7)(a), and
(c)
that application is not determined before the end of the
period mentioned in subsection (1) of this section,

subsection (1) does not apply and an election within section
187A(7)(b) may be made by notice to an officer of Revenue and
40
Customs at any time before the tribunal determines the application
or the application is withdrawn.”
      (4)
For subsection (3)(f) substitute—
“(f)
in relation to each of the persons making the election—
(i)
that person’s Unique Taxpayer Reference, or
45
(ii)
that the person does not have a Unique Taxpayer
Reference.”