House of Commons portcullis
House of Commons
Session 2007 - 08
Internet Publications
Other Bills before Parliament

Finance Bill


Finance Bill
Schedule 24 — Annual investment allowance
Part 1 — Amendments of CAA 2001

290

 

51C     

Second restriction: groups of companies

(1)   

This section applies in relation to—

(a)   

a company which, in a financial year, is a parent undertaking

of one or more other companies, and

(b)   

those other companies.

5

(2)   

The companies are entitled to a single annual investment allowance

between them in respect of the relevant AIA qualifying expenditure.

(3)   

The companies may allocate the annual investment allowance to the

relevant AIA qualifying expenditure as they think fit.

(4)   

The relevant AIA qualifying expenditure is the AIA qualifying

10

expenditure incurred by the companies in chargeable periods ending

in the financial year mentioned in subsection (1).

(5)   

A company (“P”) is a parent undertaking of another company (“C”)

in a financial year if P is a parent undertaking of C at the end of C’s

chargeable period ending in that financial year.

15

(6)   

In this section “parent undertaking” has the same meaning as in

section 1162 of the Companies Act 2006.

(7)   

This section is subject to section 51D.

51D     

Third restriction: groups of companies under common control

(1)   

Where in a financial year two or more groups of companies are—

20

(a)   

controlled by the same person (see section 51F), and

(b)   

related to one another (see section 51G),

   

this section applies in relation to the companies which are members

of those groups.

(2)   

The companies are entitled to a single annual investment allowance

25

between them in respect of the relevant AIA qualifying expenditure.

(3)   

The companies may allocate the annual investment allowance to the

relevant AIA qualifying expenditure as they think fit.

(4)   

The relevant AIA qualifying expenditure is the AIA qualifying

expenditure incurred by the companies in chargeable periods ending

30

in the financial year mentioned in subsection (1).

(5)   

In this section and in sections 51F and 51G, a group of companies

means—

(a)   

a company which, in the financial year mentioned in

subsection (1), is a parent undertaking of one or more other

35

companies, and

(b)   

those other companies,

   

(and the members of the group are the company which is the parent

undertaking and those other companies).

(6)   

A company (“P”) is a parent undertaking of another company (“C”)

40

in a financial year if P is a parent undertaking of C at the end of C’s

chargeable period ending in that financial year.

(7)   

In this section “parent undertaking” has the same meaning as in

section 1162 of the Companies Act 2006.

 
 

Finance Bill
Schedule 24 — Annual investment allowance
Part 1 — Amendments of CAA 2001

291

 

51E     

Fourth restriction: other companies under common control

(1)   

This section applies in relation to two or more companies which in a

financial year are—

(a)   

controlled by the same person (see section 51F), and

(b)   

related to one another (see section 51G),

5

   

and in relation to which to neither section 51C nor section 51D

applies.

(2)   

The companies are entitled to a single annual investment allowance

between them in respect of the relevant AIA qualifying expenditure.

(3)   

The companies may allocate the annual investment allowance to the

10

relevant AIA qualifying expenditure as they think fit.

(4)   

The relevant AIA qualifying expenditure is the AIA qualifying

expenditure incurred by the companies in chargeable periods ending

in the financial year mentioned in subsection (1).

51F     

Companies and groups: meaning of “control”

15

(1)   

A company is controlled by a person in a financial year if it is

controlled by that person at the end of its chargeable period ending

in that financial year.

(2)   

A group of companies is controlled by a person in a financial year if

the company which is the parent undertaking is controlled by that

20

person at the end of its chargeable period ending in that financial

year.

(3)   

Section 574(2) defines “control” in relation to a company which is a

body corporate.

(4)   

In relation to a company (“C”) which is not a body corporate, control

25

means the power of a person (“P”) to secure—

(a)   

by means of the holding of shares or the possession of voting

power in relation to C or another body, or

(b)   

as a result of any powers conferred by the constitution of C or

another body,

30

   

that the affairs of C are conducted in accordance with P’s wishes.

(5)   

In subsection (4) “shares” has the meaning given by section 1161(2)

of the Companies Act 2006.

51G     

Companies and groups: meaning of “related”

(1)   

A company (“C1”) is related to another company (“C2”) in a financial

35

year if one or both of—

(a)   

the shared premises condition, and

(b)   

the similar activities condition,

   

are met in relation to the companies in that financial year.

(2)   

Where C1 is related to C2 in a financial year, C1 is also related to any

40

other company to which C2 is related in that financial year.

(3)   

A group of companies (“G1”) is related to another group of

companies (“G2”) in a financial year if in that financial year a

 
 

Finance Bill
Schedule 24 — Annual investment allowance
Part 1 — Amendments of CAA 2001

292

 

company which is a member of G1 is related to a company which is

a member of G2.

(4)   

Where G1 is related to G2 in a financial year, G1 is also related to any

other group of companies to which G2 is related in that financial

year.

5

(5)   

The shared premises condition is met in relation to two companies in

a financial year if, at the end of the relevant chargeable period of one

or both of the companies, the companies carry on qualifying

activities from the same premises.

(6)   

The similar activities condition is met in relation to two companies in

10

a financial year if—

(a)   

more than 50% of the turnover of one company for the

relevant chargeable period is derived from qualifying

activities within a particular NACE classification, and

(b)   

more than 50% of the turnover of the other company for the

15

relevant chargeable period is derived from qualifying

activities within that NACE classification.

(7)   

In this section—

“NACE classification” means the first level of the common

statistical classification of economic activities in the European

20

Union established by Regulation (EC) No 1893/2006 of the

European Parliament and the Council of 20 December 2006

(as that Regulation has effect from time to time), and

“relevant chargeable period”, in relation to a company and a

financial year, means the chargeable period of the company

25

ending in that financial year.

51H     

Fifth restriction: qualifying activities under common control

(1)   

This section applies in relation to two or more qualifying activities

which, in a tax year—

(a)   

are carried on by a qualifying person other than a company,

30

(b)   

are controlled by the same person (see section 51I), and

(c)   

are related to one another (see section 51J).

(2)   

A qualifying activity is carried on by a qualifying person in a tax year

if it is carried on by the person at the end of the chargeable period for

the activity ending in the tax year.

35

(3)   

Where all the qualifying activities are carried on by one qualifying

person, that person is entitled to a single annual investment

allowance in respect of the relevant AIA qualifying expenditure.

(4)   

Where the qualifying activities are carried on by more than one

qualifying person, those persons are entitled to a single annual

40

investment allowance between them in respect of the relevant AIA

qualifying expenditure.

(5)   

The person or persons carrying on the qualifying activities may

allocate the annual investment allowance to the relevant AIA

qualifying expenditure as the person or persons think fit.

45

(6)   

The relevant AIA qualifying expenditure is the AIA qualifying

expenditure incurred for the purposes of the qualifying activities in

 
 

Finance Bill
Schedule 24 — Annual investment allowance
Part 1 — Amendments of CAA 2001

293

 

the chargeable periods for those activities ending in the tax year

mentioned in subsection (1).

51I     

Qualifying activities: meaning of control

(1)   

A qualifying activity is controlled by a person in a tax year if it is

controlled by the person at the end of the chargeable period for that

5

activity which ends in that tax year.

(2)   

A qualifying activity carried on by an individual is controlled by the

individual who carries it on.

(3)   

A qualifying activity carried on by a partnership is controlled by the

person (if any) who controls the partnership.

10

(4)   

Section 574(3) defines “control” in relation to a partnership.

(5)   

Where partners who between them control one partnership also

between them control another partnership, the qualifying activities

carried on by the partnerships are to be treated as controlled by the

same person.

15

51J     

Qualifying activity: meaning of “related”

(1)   

A qualifying activity (“A1”) is related to another qualifying activity

(“A2”) in a tax year if one or both of—

(a)   

the shared premises condition, and

(b)   

the similar activities condition,

20

   

are met in relation to the activities in the tax year.

(2)   

Where A1 is related to A2 in a tax year, A1 is also related to any other

qualifying activity to which A2 is related in that tax year.

(3)   

The shared premises condition is met in relation to two qualifying

activities in a tax year if, at the end of the relevant chargeable period

25

for one or both of the activities, the activities are carried on from the

same premises.

(4)   

The similar activities condition is met in relation to two qualifying

activities in a tax year if, at the end of the relevant chargeable period

for one or both of the activities, the activities are within the same

30

NACE classification.

(5)   

In this section—

“NACE classification” has the same meaning as in section 51G,

and

“relevant chargeable period”, in relation to a qualifying activity

35

and a tax year, means the chargeable period for that activity

ending in that tax year.

51K     

Operation of annual investment allowance where restrictions apply

(1)   

This section applies where because of section 51B, 51C, 51D, 51E or

51H a person is (or persons between them are) entitled to a single

40

annual investment allowance in respect of relevant AIA qualifying

expenditure.

(2)   

If the relevant AIA qualifying expenditure is less than or equal to the

maximum allowance, the person is (or the persons between them

 
 

Finance Bill
Schedule 24 — Annual investment allowance
Part 1 — Amendments of CAA 2001

294

 

are) entitled to an annual investment allowance in respect of all the

relevant AIA qualifying expenditure.

(3)   

If the relevant AIA qualifying expenditure is more than the

maximum allowance, the person is (or the persons between them

are) entitled to an annual investment allowance in respect of so much

5

of the relevant AIA qualifying expenditure as does not exceed the

maximum allowance.

(4)   

The maximum allowance is the amount for the time being specified

in section 51A(5); but this is subject to sections 51M and 51N (which

provide that in certain cases an additional amount of annual

10

investment allowance may be available).

(5)   

The person or persons may claim an annual investment allowance in

respect of all the relevant AIA qualifying expenditure in respect of

which the person is (or the persons between them are) entitled to an

allowance, or in respect of only some of it.

15

(6)   

The amount of the annual investment allowance allocated to relevant

AIA qualifying expenditure incurred in a chargeable period must

not exceed the amount of the annual investment allowance to which

a person would be entitled in respect of that expenditure under

section 51A(5) and (6) if section 51B, 51C, 51D, 51E or 51H did not

20

apply.

51L     

Special provision for short chargeable periods

(1)   

This section applies where—

(a)   

more than one chargeable period of a company ends in a

financial year, or

25

(b)   

more than one chargeable period for a qualifying activity

ends in a tax year.

(2)   

Whether section 51C, 51D or 51E applies in relation to the company,

or section 51H applies in relation to the qualifying activity, is to be

determined in relation to each chargeable period ending in that year

30

as if it were the only chargeable period ending in that year.

(3)   

AIA qualifying expenditure incurred in a chargeable period in

relation to which the section in question does not apply is not

relevant AIA qualifying expenditure for the purposes of that section.

51M     

Special provision for long chargeable periods

35

(1)   

This section applies where—

(a)   

section 51H applies in relation to two or more qualifying

activities controlled by a person (“P”) in a tax year, and

(b)   

the relevant chargeable period for one of those qualifying

activities (“A1”) is longer than a year.

40

(2)   

An additional amount of annual investment allowance may be

allocated to relevant AIA qualifying expenditure incurred for the

purposes of A1.

(3)   

That additional amount is the amount, or the aggregate of the

amounts, of any relevant unused allowance for each tax year (a

45

“previous tax year”)—

 
 

Finance Bill
Schedule 24 — Annual investment allowance
Part 1 — Amendments of CAA 2001

295

 

(a)   

which falls before the tax year mentioned in subsection (1)(a),

and

(b)   

in which part of A1’s relevant chargeable period falls.

(4)   

The amount of the relevant unused allowance for a previous tax year

is (subject to subsections (7) and(8))—equation: plus[(*n*)times[(*n*)char[(*n*)M],char[(*n*)A]],minus[(*n*)times[char[(*n*)A],char[

M]]]]

5

   

but where the amount given by that formula is less than nil, the

amount of the relevant unused allowance for the previous tax year is

nil.

(5)   

In subsection (4)—

MA is the amount specified in section 51A(5) in relation to the

10

previous tax year, and

AM is the amount of any annual investment allowance made

under section 51A or 51K in respect of AIA qualifying

expenditure incurred for the purposes of a relevant

qualifying activity in the chargeable period for that activity

15

ending in the previous tax year.

(6)   

“Relevant qualifying activity” means—

(a)   

any qualifying activity carried on by a qualifying person

other than a company which was controlled by P in the

previous tax year (see section 51I) and related to A1 in that

20

tax year (see section 51J), and

(b)   

if A1 was controlled by P in the previous tax year (see section

51I), A1.

(7)   

Where any part of the amount calculated under subsection (4) has,

on a previous application of this section, been allocated to AIA

25

qualifying expenditure incurred for the purposes of a qualifying

activity controlled by P in a tax year before that mentioned in

subsection (1)(a), the amount of the relevant unused allowance is

reduced accordingly.

(8)   

Where the amount of the relevant unused allowance for a previous

30

tax year would (apart from this subsection) exceed—equation: cross[over[times[char[D],char[C],char[P],char[Y]],times[char[D],char[Y]]],times[

char[M],char[A]]]

   

the amount of the relevant unused allowance for that tax year is

limited to the amount given by that formula.

(9)   

In subsection (8)—

DCPY is the number of days in A1’s relevant chargeable period

35

falling in the previous tax year,

DY is the number of days in that tax year, and

MA has the meaning given by subsection (5).

(10)   

Nothing in this section prevents section 51K(6) applying in relation

to relevant AIA qualifying expenditure incurred for the purposes of

40

A1.

(11)   

In this section references to a relevant chargeable period, in relation

to a qualifying activity, are to the chargeable period for that activity

ending in the tax year mentioned in subsection (1)(a).

 
 

 
previous section contents continue
 
House of Commons home page Houses of Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 2008
Revised 27 March 2008