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| Sale and leaseback. |
76. - (1) After section 76A of the Capital Allowances Act 1990 insert-
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| "Special provision for sale and leaseback cases. |
76B. - (1) This section applies where-
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(a) subsection (1), (2) or (3) of section 75 applies by virtue of paragraph (b) (and not by virtue of paragraph (a) or (c)) of that subsection, or is treated (under one or both of sections 76(1) and 76A(1)) as so applying; |
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(b) the conditions set out in subsection (2) below are fulfilled; and |
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(c) the seller and the buyer elect that this section should apply. |
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(2) The conditions are-
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(a) that the seller incurred capital expenditure on the provision of the machinery or plant; |
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(b) that the machinery or plant was new at or after the time when it was acquired by the seller; |
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(c) that the machinery or plant was acquired by the seller otherwise than as a result of a transaction to which section 75(1), (2) or (3) applies, or is treated (under one or both of sections 76(1) and 76A(1)) as applying; |
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(d) that the sale is effected not more than four months after the first occasion on which the machinery or plant is brought into use by any person for any purpose; |
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(e) that the seller has not- |
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(i) made a claim for an allowance in respect of capital expenditure incurred on the provision of the machinery or plant;
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(ii) made a return in which such expenditure is taken into account in determining his qualifying expenditure for the purposes of section 24; or
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(iii) given notice of any such amendment of a return as provides for such expenditure to be so taken into account.
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(3) In a case where this section applies-
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(a) no allowance shall be made to the seller under this Act in respect of the capital expenditure incurred on the provision of the machinery or plant, or any additional VAT liability incurred in respect of it; |
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(b) the whole amount of that expenditure, and any such liability, shall be left out of account in determining the amount for any period of the seller's qualifying expenditure under section 25; |
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(c) section 76(2) shall have effect as if paragraph (a) were omitted; and |
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(d) section 76A shall have effect as if subsection (5) were omitted. |
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(4) An election under this section shall be made by notice to an officer of the Board not more than two years after the time of the sale.
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(5) An election under this section shall be irrevocable once made; and nothing in-
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(a) section 42 of, or Schedule 1A to, the Taxes Management Act 1970 (claims and elections for income tax purposes); or |
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(b) paragraphs 54 to 60 of Schedule 18 to the Finance Act 1998 (claims and elections for corporation tax purposes), |
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shall apply to such an election.
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(6) In this section, in a case where section 75(2) applies or is treated as applying, "the seller" means the owner of the machinery or plant, "the buyer" means the person entering into the contract and "the sale" means the making of the contract.
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(7) In this section, in a case where section 75(3) applies or is treated as applying-
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(a) "the seller" means the assignor, "the buyer" means the assignee and "the sale" means the assignment; and |
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(b) references to the machinery or plant being acquired by the seller shall be construed as references to the contract being entered into by the assignor. |
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(8) In this section "return" means any return required to be made under the Taxes Management Act 1970 for income tax or corporation tax purposes.".
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(2) In subsections (1), (2) and (3) of section 75 of that Act, after "76A" there shall be inserted ", 76B".
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| Meaning of "fixture". |
77. - (1) Section 51 of the Capital Allowances Act 1990 (application and interpretation of Chapter VI: plant and machinery: fixtures) is amended as follows.
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(2) In subsection (1) for the words from the beginning to "other land" substitute-
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"(1) This Chapter applies to determine entitlement to allowances under this Part in respect of expenditure on the provision of machinery or plant that is, or becomes, a fixture;".
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(3) In subsection (2) (definitions), for the definition of "fixture" substitute-
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""fixture", subject to subsection (2A) below, means machinery or plant that is so installed or otherwise fixed in or to a building or other description of land as to become, in law, part of that building or other land;". |
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(4) After subsection (2), insert-
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"(2A) In this Chapter-
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"fixture" includes any boiler, or water-filled radiator, installed in a building as part of a space or water heating system; and |
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"relevant land", in relation to such a fixture, means the building in which it is so installed.". |
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(5) For subsection (8) substitute-
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"(8) Nothing in this Chapter affects the entitlement of any person to an allowance by virtue of section 154 (allowances in respect of contributions to capital expenditure).".
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(6) The amendments in this section shall be deemed always to have had effect.
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| Leased assets under the Affordable Warmth Programme. |
78. - (1) In section 53 of the Capital Allowances Act 1990 (fixtures: expenditure incurred by equipment lessor), after subsection (1C) insert-
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"(1D) Where the conditions in subsection (1E) below are satisfied in any case, subsection (1) above shall have effect as if the following were omitted, that is to say-
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(a) in paragraph (b), the words from "for the purposes of" to "by the equipment lessee", and |
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(b) paragraphs (ba), (bb) and (d). |
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(1E) Those conditions are-
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(a) that the machinery or plant consists of a boiler, heat exchanger, radiator or heating control that is installed in a building as part of a space or water heating system; and |
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(b) that the agreement for the lease is approved for the purposes of this section as entered into as part of the Affordable Warmth Programme. |
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(1F) The approval mentioned in subsection (1E)(b) above may be given, with the consent of the Treasury-
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(a) by the Secretary of State; |
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(b) in the case of buildings in Scotland, by the Scottish Ministers; |
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(c) in the case of buildings in Wales, by the National Assembly for Wales; |
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(d) in the case of buildings in Northern Ireland, by the Department for Social Development in Northern Ireland. |
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(1G) Where any such approval is withdrawn-
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(a) the approval shall be treated for the purposes of subsection (1E)(b) above as never having had effect, and |
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(b) all such assessments and adjustments of assessments shall be made as are necessary in consequence of the withdrawal of the approval. |
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(1H) Where a person who has made a return becomes aware that anything contained in the return has, after being made, become incorrect by reason of the withdrawal of any such approval, he shall, within three months of first becoming so aware, give notice to an officer of the Board of the amendments required to his return in consequence of the withdrawal of approval.".
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(2) In the second column of the table in section 98 of the Taxes Management Act 1970 (penalty for failure to provide information etc.), in the entry relating to requirements imposed by provisions of the Capital Allowances Act 1990, for "and 51(6A)" substitute "51(6A) and 53(1H)".
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(3) This section has effect in relation to expenditure incurred after the passing of this Act and before 1st January 2008.
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| Fixtures and machinery and plant on hire-purchase etc. |
79. - (1) In section 60 of the Capital Allowances Act 1990 (machinery and plant on hire-purchase etc.), after subsection (3) insert-
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"(4) This section has effect subject to section 60A below.".
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(2) After that section insert-
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| "Machinery and plant on hire-purchase etc.: fixtures. |
60A. - (1) Section 60 does not-
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(a) apply to expenditure incurred on machinery or plant that is a fixture, or |
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(b) prevent Chapter VI of this Part (fixtures) applying in relation to expenditure on machinery or plant incurred under such a contract as is mentioned in subsection (1) of that section. |
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(2) If machinery or plant that is treated as belonging to a person under section 60 becomes a fixture, then, unless it is treated under Chapter VI of this Part as belonging to that person, it shall be treated for the purposes of this Part as ceasing to belong to him at the time when it becomes a fixture.
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(3) In this section "fixture" has the same meaning as in Chapter VI of this Part.".
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(3) In section 60A of that Act (as inserted by subsection (2) above)-
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(a) subsection (1) shall be deemed always to have had effect, and |
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(b) subsection (2) does not apply where the machinery or plant concerned became a fixture (within the meaning of that section) before the passing of this Act. |
| Production sharing contracts. |
80. - (1) After section 64 of the Capital Allowances Act 1990 insert-
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| "Production sharing contracts. |
64A. - (1) Subsection (2) below applies where-
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(a) a person ("the contractor") is entitled to an interest in a contract made with, or with the authorised representative of, the government of a country or territory in which oil is or may be produced; |
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(b) the contract provides (among other things) that any machinery or plant of a description specified in the contract which- |
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(i) is provided by the contractor; and
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(ii) is used for qualifying purposes under the contract,
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shall (whether immediately or at some later time) be transferred to the government or representative; |
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(c) the contractor incurs capital expenditure on the provision of machinery or plant of a description so specified which, for the purposes of a trade of oil extraction carried on by him, is to be used for qualifying purposes under the contract; |
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(d) the amount of that expenditure is commensurate with the value of the contractor's interest under the contract; and |
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(e) in accordance with the provision mentioned in paragraph (b) above, the machinery or plant is transferred to the government or representative. |
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(2) The machinery or plant shall, notwithstanding the transfer and subject to subsection (6) below, be deemed for the purposes of this Part to belong to the contractor (and not to any other person) until such time as it-
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(a) ceases to belong to the government or representative; or |
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(b) ceases to be used, or held for use, by any person under the contract. |
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(3) Subsection (4) below applies where, in a case falling within subsection (1)(a) and (b) above-
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(a) a person ("the participator") acquires an interest in the contract, whether from the contractor or from another person who has acquired it (directly or indirectly) from the contractor; |
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(b) the participator incurs capital expenditure on the provision of machinery or plant which, for the purposes of a trade of oil extraction carried on by him, is to be used for qualifying purposes under the contract; |
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(c) the amount of that expenditure is commensurate with the value of the participator's interest under the contract; and |
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(d) in accordance with the provision mentioned in subsection (1)(b) above, the machinery or plant is transferred to the government or representative. |
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(4) The machinery or plant shall, notwithstanding the transfer and subject to subsection (6) below, be deemed for the purposes of this Part to belong to the participator (and not to any other person) until such time as it-
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(a) ceases to belong to the government or representative; or |
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(b) ceases to be used, or held for use, by any person under the contract. |
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(5) Subsections (6) to (9) below apply where, in a case falling within subsection (1)(a) and (b) above-
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(a) a person ("the participator") acquires an interest in the contract, whether from the contractor or from another person who has acquired it (directly or indirectly) from the contractor; and |
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(b) some of the expenditure incurred by the participator to acquire his interest in the contract is attributable to machinery or plant which- |
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(i) is deemed by subsection (2) above to belong to the contractor; or
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(ii) is deemed by subsection (4) above or subsection (6) below to belong to another person ("the other participator").
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(6) The machinery or plant shall, subject to any subsequent application of this subsection, be deemed for the purposes of this Part to belong to the participator (and not to any other person) until such time as it-
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(a) ceases to belong to the government or representative; or |
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(b) ceases to be used, or held for use, by any person under the contract. |
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(7) The contractor or, as the case may be, the other participator shall be deemed for the purposes of this Part to have disposed of the machinery or plant for a consideration equal to the expenditure attributable as mentioned in subsection (5)(b) above.
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(8) The participator shall be deemed for the purposes of this Part to have incurred, on the provision of the machinery or plant, capital expenditure of an amount which, subject to subsection (9) below, is equal to the expenditure so attributable.
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(9) There shall be disregarded for the purposes of this Part so much (if any) of the expenditure deemed to be incurred by the participator on the provision of the machinery or plant as exceeds any disposal value which falls to be brought into account by the contractor or, as the case may be, the other participator by reason of his deemed disposal of the machinery or plant.
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(10) In determining for the purposes of this Part the expenditure which is attributable as mentioned in subsection (5)(b) above, regard shall be had to what is just and reasonable in all the circumstances.
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(11) For the purposes of this section machinery or plant is used for qualifying purposes if it is used-
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(a) to explore for, win access to or extract oil; |
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(b) for the initial storage or treatment of oil; or |
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(c) for other purposes ancillary to the extraction of oil. |
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(12) In this section "oil" has the same meaning as in section 196 of the Taxation of Chargeable Gains Act 1992.".
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(2) In section 26(1) of the Capital Allowances Act 1990 (disposal value), for the word "and" at the end of paragraph (ee) there shall be substituted-
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"(ef) if that event is a deemed disposal of the machinery or plant which arises solely by virtue of subsection (2), (4) or (6) of section 64A and capital compensation is received by the contractor or participator (within the meaning of that subsection), equals the amount of that compensation; |
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(eg) if that event is such a deemed disposal and no such compensation is so received, equals nil; and". |
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(3) This section has effect where the capital expenditure-
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(a) is incurred on or after 21st March 2000; or |
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(b) is treated as incurred by virtue of section 81(1)(a) of the Capital Allowances Act 1990 and the condition mentioned in that provision is fulfilled on or after that date. |
