Finance Bill (HC Bill 49)

Finance BillPage 270

(c) any other investment is made in the company which is aid
received by it pursuant to a measure approved by the
European Commission as compatible with Article 107 of the
Treaty on the Functioning of the European Union in
5accordance with the principles laid down in the Community
Guidelines on Risk Capital Investments in Small and
Medium-sized Enterprises (as those guidelines may be
amended or replaced from time to time).

(5) For the purposes of subsections (2) and (3), an investment within
10subsection (4)(b) is regarded as made when the shares are issued.

Qualifying holdings: introduction

4 In section 286 (qualifying holdings: introduction), in subsection (3), omit the
“and” at the end of paragraph (k) and after paragraph (l) insert “, and

(m) no disqualifying arrangements (see section 299A).

15Relaxation of maximum qualifying investment requirement

5 (1) Section 287 (maximum qualifying investment requirement) is amended as
follows.

(2) In subsection (1), after “that” insert “, if the condition in subsection (1A) is
met,”.

(3) 20After that subsection insert—

(1A) The condition is that—

(a) at the time of the issue of the relevant holding the relevant
company or any of its qualifying subsidiaries was a member
of a partnership or a party to a joint venture,

(b) 25the trade which meets the requirement of section 291 was at
that time being carried on, or to be carried on, by those
partners in partnership or by the parties to the joint venture,
and

(c) the other partners or parties to the joint venture include at
30least one other company.

(4) In subsection (2)—

(a) for “Subject to subsection (7), the” substitute “The”, and

(b) after “exceeds” insert “the relevant fraction of”.

(5) After that subsection insert—

(2A) 35The relevant fraction is—


where “N” is the number of companies (including the relevant
company) which, at the time when the relevant holding was issued
were members of the partnership or, as the case may be, parties to the
40joint venture.

(6) Omit subsections (6) and (7).

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Increase in the maximum amount permitted to be raised annually

6 (1) Section 292A (the maximum amount raised annually through risk capital
schemes requirement) is amended as follows.

(2) In subsection (1) for “£2 million” substitute “£5 million”.

(3) 5In subsection (3)—

(a) in paragraph (b), omit sub-paragraph (ii), and

(b) after that paragraph insert “, or

(c) any other investment is made in the company which
is aid received by it pursuant to a measure approved
10by the European Commission as compatible with
Article 107 of the Treaty on the Functioning of the
European Union in accordance with the principles
laid down in the Community Guidelines on Risk
Capital Investments in Small and Medium-sized
15Enterprises (as those guidelines may be amended or
replaced from time to time).

(4) In subsection (5) omit “or paragraph 42 of Schedule 15 to FA 2000”.

Acquisition of shares

7 In section 293 (the use of the money raised requirement), after subsection (5)
20insert—

(5A) Employing money on the acquisition of shares in a company does
not of itself amount to employing the money for the purposes of a
relevant qualifying activity.

Increase in the gross assets limits

8 25In section 297 (the gross assets requirement)—

(a) in subsections (1)(a) and (2)(a), for “£7 million” substitute “£15
million”, and

(b) in subsections (1)(b) and (2)(b), for “£8 million” substitute “£16
million”.

30Relaxation of restriction on number of employees

9 In section 297A (the number of employees requirement), in subsections (1)
and (2), for “50” substitute “250”.

No disqualifying arrangements requirement

299A 35 The no disqualifying arrangements requirement

(1) The relevant holding must not have been issued, nor any money
raised by the issue employed, in consequence or anticipation of, or
otherwise in connection with, disqualifying arrangements.

(2) Arrangements are “disqualifying arrangements” if—

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(a) the main purpose, or one of the main purposes, of the
arrangements is to secure—

(i) that a qualifying activity is or will be carried on by the
relevant company or a qualifying 90% subsidiary of
5that company, and

(ii) that shares or securities issued by the relevant
company may be comprised in any company’s
qualifying holdings or that one or more persons may
obtain relevant tax relief in respect of such shares
10which raise money for the purposes of that qualifying
activity,

(b) that qualifying activity is the relevant qualifying activity by
reference to which the requirement in section 293(1)(b)
(money raised to be employed within two years for relevant
15qualifying activity) is met in relation to the relevant holding,
and

(c) one or both of conditions A and B are met.

(3) Condition A is that, as a (direct or indirect) result of the money raised
by the issue of the relevant holding being employed as required by
20section 293(1)(b), an amount representing the whole or the majority
of the amount raised is, in the course of the arrangements, paid to or
for the benefit of a relevant person or relevant persons.

(4) Condition B is that, in the absence of the arrangements, it would have
been reasonable to expect that the whole or greater part of the
25component activities of the relevant qualifying activity would have
been carried on as part of another business by a relevant person or
relevant persons.

(5) For the purposes of this section it is immaterial whether the relevant
company is a party to the arrangements.

(6) 30In this section—

  • “component activities” means—

    (a)

    if the relevant qualifying activity is within section
    291(2), the carrying on of a qualifying trade which
    constitutes that activity, and

    (b)

    35if the relevant qualifying activity is within section
    291(3), the preparations to carry on a qualifying trade
    which constitute that activity;

  • “arrangements” includes any scheme, agreement,
    understanding, transaction or series of transactions (whether
    40or not legally enforceable);

  • “relevant person” means a person who is a party to the
    arrangements or a person connected with such a party;

  • “qualifying activity” has the same meaning as in section 291;

  • “relevant tax relief”, in respect of shares, means one or more of
    45the following—

    (a)

    relief under Chapter 6 of Part 4 (losses on disposal of
    shares) in respect of the shares;

    (b)

    EIS relief (within the meaning of Part 5) in respect of
    the shares;

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    (c)

    SEIS relief (within the meaning of Part 5A) in respect
    of the shares;

    (d)

    relief under section 150A or 150E of TCGA 1992
    (enterprise investment scheme and seed enterprise
    5investment scheme) in respect of the shares;

    (e)

    relief under Schedule 5B to that Act in consequence of
    which deferral relief is attributable to the shares;

    (f)

    relief under Schedule 5BB to that Act (seed enterprise
    investment scheme: re-investment) in consequence of
    10which SEIS re-investment relief is attributable to the
    shares (see paragraph 4 of that Schedule).

Subsidised generation or export of electricity

11 (1) Section 303 (meaning of “excluded activities”) is amended as follows.

(2) In subsection (1), omit “and” at the end of paragraph (k) and after that
15paragraph insert—

(ka) the subsidised generation or export of electricity, and.

(3) In subsection (2), omit the “and” at the end of paragraph (e) and after
paragraph (f) insert “, and

(g) section 309A (subsidised generation or export of electricity).

12 20After section 309 insert—

309A Excluded activities: subsidised generation or export of electricity

(1) This section supplements section 303(1)(ka).

(2) Electricity is exported if it is exported onto a distribution system or
transmission system (within the meaning of section 4 of the
25Electricity Act 1989).

(3) The generation of electricity is “subsidised” if a person receives a FIT
subsidy in respect of the electricity generated.

(4) The export of electricity is “subsidised” if a person receives a FIT
subsidy in respect of the electricity exported.

(5) 30But the generation or export of electricity is not to be taken to fall
within section 303(1)(ka) if Condition A, B or C is met.

(6) Condition A is that the generation or export is carried on by—

(a) a community interest company,

(b) a co-operative society,

(c) 35a community benefit society, or

(d) a NI industrial and provident society.

(7) Condition B is that the plant used to generate the electricity relies
wholly or mainly on anaerobic digestion.

(8) Condition C is that the electricity is hydroelectric power.

(9) 40For the purposes of this section—

  • “anaerobic digestion” means the bacterial fermentation of
    organic material in the absence of free oxygen (excluding
    anaerobic digestion of sewage or material in a landfill);

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  • “community benefit society” means—

    (a)

    a society registered under the Co-operative and
    Community Benefit Societies and Credit Unions Act
    1965 as a community benefit society, or

    (b)

    5a pre-2010 Act society (as defined at section 4A(1) of
    that Act) which meets the condition in section 1(3) of
    that Act;

  • “co-operative society” means—

    (a)

    a society registered under the Co-operative and
    10Community Benefit Societies and Credit Unions Act
    1965 as a co-operative society, or

    (b)

    a pre-2010 Act society (as defined at section 4A(1) of
    that Act) which meets the condition in section 1(2) of
    that Act;

  • 15“FIT subsidy” means—

    (a)

    a financial incentive under a scheme established by
    virtue of section 41 of the Energy Act 2008 (powers to
    amend licence conditions etc: feed-in tariffs) to
    encourage small-scale low-carbon generation of
    20electricity, or

    (b)

    a financial incentive under a similar scheme
    established in a territory outside the United Kingdom
    to encourage small-scale low-carbon generation of
    electricity;

  • 25NI industrial and provident society” means a society
    registered under the Industrial and Provident Societies Act
    (Northern Ireland) 1969 (c. 24 (N.I.));

  • “small-scale low-carbon generation” has the meaning given by
    section 41(4) of the Energy Act 2008.

13 30In section 310 (excluded activities: provision of services or facilities for
another business), in subsection (1)(a), for “(k)” substitute “(ka)”.

Powers to amend

14 In section 311 (power to amend Chapter by Treasury order), the existing
provision becomes subsection (1) and after that subsection insert—

(2) 35An order under this section may—

(a) make different provision for different cases or purposes, or

(b) include such transitional provision as the Treasury consider
appropriate.

Information

15 40After section 312 insert—

312A Power to require information relating to disqualifying arrangements

(1) Subsection (2) applies if an officer of Revenue and Customs has
reason to believe that the relevant company has issued the relevant
holding to the investing company in consequence of or, or otherwise
45in connection with, disqualifying arrangements (within the meaning
of section 299A(2)).

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(2) The officer may by notice require any person concerned to supply
the officer within such time as may be specified in the notice with—

(a) a declaration in writing stating whether or not, according to
the information which that person has or can reasonably
5obtain, such arrangements exist or have existed, and

(b) such other information as the officer may reasonably require
for the purposes of section 299A and as that person has or can
reasonably obtain.

(3) The period specified in a notice under subsection (2) must be at least
1060 days.

(4) A “person concerned” means—

(a) the relevant company,

(b) the investing company,

(c) any person connected with either of those companies, and

(d) 15any person whom the officer has reason to believe is or was a
party to the arrangements in question.

16 In section 313 (interpretation of Chapter 4), in subsection (5), after “Chapter”
insert “(other than section 312A)”.

Consequential amendment

17 20In section 98 of TMA 1970 (special returns, etc), in the first column of the
Table, before the entry for “regulations under Chapter 5 of Part 6 of ITA
2007” insert—

  • section 312A of ITA 2007;.

Commencement and transitional provision

18 (1) 25The amendments made by paragraphs 2 and 3 have effect in relation to
investments made on or after the day on which this Act is passed.

(2) But nothing in sub-paragraph (1) prevents investments made before that
day constituting a “relevant investment” for the purposes of section 280B of
ITA 2007 (as inserted by paragraph 3) for the purposes of determining
30whether the investment limits condition in section 274 of that Act is
breached by an investment made on or after that day.

19 (1) The amendments made by paragraphs 4, 5, 6(1) and (3), 10, 15 and 16 have
effect for the purpose of determining whether shares or securities issued on
or after 6 April 2012 are to be regarded as comprised in a company’s
35qualifying holdings.

(2) But for the purposes of paragraphs 4, 10, 15 and 16 it does not matter
whether the disqualifying arrangements were entered into before or on or
after 6 April 2012.

20 (1) The amendments made by paragraphs 6(2), 8 and 9 come into force on such
40day as the Treasury may by order appoint.

(2) Those amendments have effect for the purpose of determining whether
shares or securities issued on or after 6 April 2012 are to be regarded as
comprised in a company’s qualifying holdings.

21 (1) Paragraph 7 is to be treated as having come into force on 6 April 2012.

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(2) The amendments made by that paragraph do not have effect in relation to
an investment made by a VCT of protected money.

(3) “Protected money” means—

(a) money raised by the issue before 6 April 2012 of shares in or
5securities of the VCT, and

(b) money derived from the investment of such money.

22 (1) Subject to sub-paragraph (2), the amendments made by paragraphs 11 to 13
have effect in relation to a relevant holding issued on or after 23 March 2011.

(2) Those amendments do not have effect in relation to any relevant holding
10issued before 6 April 2012 if the relevant company, or a qualifying 90%
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
15ITA 2007 (as inserted by paragraph 10 of this Schedule) has effect as if for
paragraphs (b) and (c) there were substituted—

(b) a society registered under the Industrial and Provident
Societies Act 1965,.

Section 42

SCHEDULE 9 20Capital allowances for plant and machinery: anti-avoidance

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
25sections if B enters into a relevant transaction with S that either—

(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) 30whether the scheme or arrangement was made before or after
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
35the main purpose, or one of the main purposes, of a party in entering
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
40would not otherwise be obtained includes obtaining an allowance
that is in any way more favourable to a person than the one that
would otherwise be obtained.

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(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)
or, as the case may be, 218ZA(3).

(7) 5The 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

(b) that B is entitled to an allowance in respect of an amount of
10capital 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

(b) a tax advantage not of such a kind,

15subsections (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
“section 218(1),” insert “218ZA(1) or (3),”.

3 20In 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))”.

5 (1) Section 218 of that Act (restriction on B’s qualifying expenditure) is
25amended 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).

(4) Accordingly, in the heading of that section, insert at the end “: section 214 or
30216
”.

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
expenditure under the relevant transaction is to be left out of account
35in 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
is obtained by B or another person and whether it relates to
40the 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.

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(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,

5the amount of expenditure to be left out of account is the greater of X
and Y.

(4) For the purposes of subsection (3)—

  • “X” is the amount found under subsection (2), and

  • “Y” is the amount by which B’s expenditure under the relevant
    10transaction 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—

(a) the allowance mentioned in subsection (7)(a) of that section is
to be calculated using the rate that would be used without the
15tax 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
the tax advantage.

(6) Subsection (5) applies whether or not section 218 also applies as a
20result 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

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) 25For subsection (1) substitute—

(1) The restrictions in sections 217 and 218 do not apply in relation to
any plant or machinery if—

(a) the relevant transaction is within section 213(1)(a) or (b),

(b) the case does not fall within section 215, and

(c) 30the conditions in subsection (3) are met.

(3) Omit subsection (2).

Relevant transactions

8 After section 268D of CAA 2001 insert—

268E Meaning of “assigns”

(1) 35For 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
becomes entitled, and A ceases to be entitled, to the benefit or
rights (whether by assignment, novation, variation or
40replacement of the contract, by operation of law or
otherwise), and

(b) references to an assignment are to be read accordingly.

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(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) 5The amendments made by paragraphs 1 to 7 of this Schedule have effect in
relation to expenditure of B’s that is incurred on or after the start date
(regardless of when the relevant transaction was entered into).

(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) 10The start date is—

(a) 1 April 2012, for corporation tax purposes, and

(b) 6 April 2012, for income tax purposes.

Section 43

SCHEDULE 10 Plant and machinery allowances: fixtures

15Introductory

1 CAA 2001 is amended as follows.

Changes in ownership

2 After section 187 insert—

187A Effect of changes in ownership of a fixture

(1) 20This 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
expenditure”) on its provision for the purposes of a
qualifying activity carried on by the current owner,

(b) 25the 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
for the purposes of a qualifying activity carried on by that
person,

(c) 30the plant or machinery is within paragraph (b) otherwise
than as a result of section 538 (contribution allowances for
plant and machinery), and

(d) a person mentioned in paragraph (b) was entitled to claim an
allowance under this Part in respect of the historic
35expenditure.

(2) In this section—

  • “the past owner” means—

    (a)

    the person mentioned in paragraph (d) of subsection
    (1), or

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    (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
    by whom expenditure was incurred most recently;

  • 5“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—

(a) the pooling requirement is not satisfied,

(b) 10the fixed value requirement applies but is not satisfied, or

(c) the disposal value statement requirement applies but is not
satisfied,

in relation to the past owner.

(4) The pooling requirement is that—

(a) 15the historic expenditure has been allocated to a pool in a
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
20expenditure (or any part of it).

(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
25196.

(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
30subsection (8), or copies of them, (directly or indirectly) from
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) 35For the purposes of subsection (6)(a) a relevant apportionment of the
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
40year period, or

(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
45(a) and not determined or withdrawn by the end of
that period, before that application is determined or
withdrawn.

(8) The statements referred to in subsection (6)(b) are—

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(a) a written statement made by the purchaser from the past
owner or, as the case may be, lessee, that the requirement of
subsection (6)(a) has not been met and is no longer capable of
being met, and

(b) 5a written statement made by the past owner of the amount of
the disposal value that the past owner has in fact brought into
account.

(9) In subsections (6) to (8)—

(a) in a case falling within item 1 or 9 of the Table in section 196—

  • 10“affected parties” means the past owner and the
    purchaser from the past owner;

  • “apportionable sum” means the sale price;

  • “election” means an election under section 198;

  • “relevant 2 year period” means the period of 2 years
    15beginning with the date when the purchaser from the
    past owner acquires the qualifying interest;

(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
    20the lessee for the lease;

  • “election” means an election under section 199;

  • “relevant 2 year period” means the period of 2 years
    beginning with the date when the lessee is granted
    the lease.

(10) 25The disposal value statement 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 2 or 3 of the Table in
section 196 or in accordance with item 7 of the Table in section 61.

(11) 30The disposal value statement requirement is—

(a) that the past owner has, no later than 2 years after the date
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
35account, and

(b) the current owner has obtained that statement or a copy of it
(directly or indirectly) from the past owner.

187B Section 187A: supplementary provision

(1) It is for the current owner to show—

(a) 40whether the fixed value requirement applies and, if so, is
satisfied, and

(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,
45on request, with a copy of any tribunal decision, election or
statement by reason of which a requirement mentioned in paragraph
(a) or (b) is satisfied.

(2) Where—

Finance BillPage 282

(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,

subsections (2) and (4) of section 200 apply in relation to the making
5of 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
owner may be the same person.

(4) 10In that section “relevant earlier time” means (subject to subsection
(5)) any time which falls 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) If, before the earliest time when the current owner is treated as
15owning the plant or machinery as a result of incurring the new
expenditure—

(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,
20and

(c) the buyer and seller were not connected persons at the time
of the sale,

the relevant earlier time does not include any time before the seller
ceased to own the plant or machinery.

(6) 25Nothing 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
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 30In section 198 (election to apportion sale price on sale of qualifying
interest)—

(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
35follows.

(2) In subsection (1), at the end insert—

  • But this is subject to subsection (1A).

(3) After that subsection insert—

(1A) Where—

(a) 40the requirement of subsection (6) of section 187A (effect of
changes in ownership of fixture: fixed value requirement)
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
45section 196,

(b) an application is made to the tribunal for the purposes of
section 187A(7)(a), and

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(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
5Customs 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

(ii) 10that the person does not have a Unique Taxpayer
Reference.

5 (1) In section 563 (procedure for determining certain questions affecting two or
more persons), in subsection (1)(a) for “two” substitute “one”.

(2) Accordingly, in the heading for that section for “two” substitute “one”.

15Fixtures on which business premises renovation allowance has been made

6 After section 186 insert—

186A Fixtures on which a business premises renovation allowance has been
made

(1) This section applies if—

(a) 20a person (“the past owner”) has at any time claimed an
allowance to which that person was entitled under Part 3A
(business premises renovation allowances) in respect of
qualifying expenditure under that Part incurred in respect of
a qualifying building (“Part 3A expenditure”),

(b) 25there has been a balancing event within section 360N(1) as a
result of which an asset representing the whole or part of the
Part 3A expenditure (“the Part 3A asset”) ceased to be owned
by the past owner,

(c) the Part 3A asset was or included plant or machinery, and

(d) 30the current owner makes a claim under this Part in respect of
expenditure (“new expenditure”) incurred—

(i) on the provision of the plant or machinery, and

(ii) at a time when it is a fixture.

(2) If the new expenditure exceeds the maximum allowable amount, the
35excess is to be left out of account in determining the current owner’s
qualifying expenditure.

(3) If the proceeds from the balancing event mentioned in subsection
(1)(b) exceed R, the maximum allowance amount is—


40where—

  • F is so much of the proceeds from the balancing event as are
    attributable to the fixture,

  • T is the total amount of the proceeds from the balancing
    event, and

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  • R is the qualifying expenditure incurred by the past owner on
    the Part 3A asset less the net Part 3A allowances in respect of
    that asset.

(4) Where subsection (3) does not apply, the maximum allowable
5amount is so much of the proceeds from the balancing event as are
attributable to the fixture.

(5) For the purposes of subsection (3) the “net Part 3A allowances” in
respect of the Part 3A asset means—

(a) the total of any allowances made under Part 3A in respect of
10the past owner’s qualifying expenditure, less

(b) the total of any balancing charges made under that Part in
respect of that expenditure.

(6) For the purposes of this section, the current owner of the plant or
machinery is—

(a) 15the person who acquired the Part 3A asset from the past
owner, or

(b) any person who is subsequently treated as the owner of the
plant or machinery.

7 In section 9 (interaction between fixtures claims and other claims), in
20subsection (2)—

(a) in paragraph (a), after “Part 3” insert “, 3A”, and

(b) in paragraph (b), after “section 186(2)” insert “, 186A(2)”.

8 In section 57 (available qualifying expenditure), in subsection (3), after
“section 186(2)” insert “, 186A(2)”.

9 25In section 198 (election to apportion sale price on sale of qualifying interest),
for subsection (5)(a) substitute—

(a) sections 186, 186A and 187 (fixtures on which industrial
buildings allowance, business premises renovation
allowance or research and development allowance has been
30made),.

10 In section 199 (election to apportion capital sum given by lessee on grant of
lease), for subsection (5)(a) substitute—

(a) sections 186, 186A and 187 (fixtures on which industrial
buildings allowance, business premises renovation
35allowance or research and development allowance has been
made),.

Commencement and transitionals

11 The amendments made by paragraphs 2 to 5 have effect—

(a) for income tax purposes, in relation to new expenditure incurred on
40or after 6 April 2012, and

(b) for corporation tax purposes, in relation to new expenditure incurred
on or after 1 April 2012.

12 The amendments made by paragraph 6 to 10 have effect—

(a) for income tax purposes, in relation to balancing events which occur
45on or after 6 April 2012, and

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(b) for corporation tax purposes, in relation to balancing events which
occur on or after 1 April 2012.

13 (1) Where (ignoring this sub-paragraph) plant or machinery would be treated
for the purposes of subsection (1)(b) of section 187A of CAA 2001 as having
5been owned by a person for a period which began and ended before the
commencement date, that period of ownership is, for those purposes, to be
regarded as not occurring at a relevant earlier time.

(2) Section 187A(3)(a) of CAA 2001 (imposition of the pooling requirement)
does not apply if the period for which the plant or machinery is treated as
10having been owned by the past owner as a result of incurring the historic
expenditure ends no later than the end of the period of 2 years beginning
with the commencement date.

(3) “The commencement date” means—

(a) for income tax purposes, 6 April 2012, and

(b) 15for corporation tax purposes, 1 April 2012.

Section 44

SCHEDULE 11 Expenditure on plant and machinery for use in designated assisted areas

1 CAA 2001 is amended as follows.

2 In section 39 (first-year allowances available for certain types of qualifying
20expenditure only), at the appropriate place in the list insert—

section 45K expenditure on plant and
machinery for use in designated
assisted areas.

3 25After section 45J insert—

45K Expenditure on plant and machinery for use in designated assisted
areas

(1) Expenditure is first-year qualifying expenditure if—

(a) it is incurred by a company on the provision of plant or
30machinery for use primarily in an area which at the time the
expenditure is incurred is a designated assisted area,

(b) it is incurred in the period of 5 years beginning with 1 April
2012,

(c) Conditions A to E are met.

(c)(c)35Conditions A to E are met.

(2) “Designated assisted area” means an area which—

(a) is designated by an order made by the Treasury, and

(b) falls wholly within an assisted area.

(3) An area may be designated by an order under subsection (2)(a) only
40if at the time the order is made—

(a) the area falls wholly within an enterprise zone, and

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(b) a memorandum of understanding, in respect of the area,
relating to the availability of allowances in respect of
expenditure to which this section applies has been entered
into by the Treasury and the responsible authority for the
5area.

(4) An order made under subsection (2)(a) may provide that an area
designated by the order is to be treated as having been so designated
at times falling before the order is made.

(5) But where an area has previously been designated by an order under
10subsection (2)(a), section 14 of the Interpretation Act 1978 does not
apply, by virtue of subsection (4), so as to imply a power to make an
order (“the new order”) treating that area (or any part of it) as if it
were not so designated at times falling before the new order is made.

(6) Condition A is that the company is within the charge to corporation
15tax.

(7) Condition B is that the expenditure is incurred for the purposes of a
qualifying activity within section 15(1)(a) or (f).

(8) Condition C is that the expenditure is incurred for the purposes of—

(a) a business of a kind not previously carried on by the
20company,

(b) expanding a business carried on by the company, or

(c) starting up an activity which relates to a fundamental change
in a product or production process of, or service provided by,
a business carried on by the company.

(9) 25Condition D is that the plant or machinery is unused and not second-
hand.