|
| |
|
plant and machinery which the company has previously |
| |
| |
ARL is the amount of the restored loss (or the aggregate of the |
| |
amounts of the restored loss) on any previous application |
| |
| 5 |
Clawback of first-year tax credits: administrative provision |
| |
27 (1) | Where paragraph 24 applies, all such assessments and |
| |
adjustments of assessments are to be made as are necessary. |
| |
(2) | If a company which has made a tax return becomes aware that, as |
| |
a result of that paragraph applying after the return was made, the |
| 10 |
return has become incorrect, it must give notice to HMRC |
| |
specifying how the return needs to be amended. |
| |
(3) | The notice must be given within 3 months beginning with the day |
| |
on which the company became aware that anything in the tax |
| |
return had become incorrect because of paragraph 24. |
| 15 |
| |
| |
Artificially inflated claims |
| |
28 (1) | To the extent that a transaction is attributable to arrangements |
| |
entered into wholly or mainly for a disqualifying purpose, it shall |
| 20 |
be disregarded in determining for a chargeable period the amount |
| |
of any first-year tax credit to which a company is entitled under |
| |
| |
(2) | Arrangements are entered into wholly or mainly for a |
| |
disqualifying purpose if their main object, or one of their main |
| 25 |
objects, is to enable a company to obtain a first-year tax credit— |
| |
(a) | to which it would not otherwise be entitled, or |
| |
(b) | of a greater amount than that to which it would otherwise |
| |
| |
(3) | “Arrangements” includes any scheme, agreement or |
| 30 |
understanding, whether or not legally enforceable. |
| |
| |
| |
“HMRC” means the Commissioners for Her Majesty’s |
| |
| 35 |
“national insurance contributions” means contributions |
| |
under Part 1 of the Social Security Contributions and |
| |
Benefits Act 1992 or Part 1 of the Social Security |
| |
Contributions and Benefits (Northern Ireland) Act 1992.” |
| |
|
| |
|
| |
|
6 | In Part 1 of Schedule 1, insert at the appropriate places— |
| |
| | The Finance Act 2000 (c. 17)” |
| | | | | The Finance Act 2001 (c. 9)” |
| | | | | The Finance Act 2002 (c. 23)”. |
| | |
|
| 5 |
Amendments of other enactments |
| |
| |
7 (1) | Section 826 of ICTA (interest on tax overpaid) is amended as follows. |
| |
(2) | In subsection (1), after paragraph (f) insert “, or |
| |
(g) | a payment of first-year tax credit falls to be made to a |
| 10 |
company under Schedule A1 to the Capital Allowances Act.” |
| |
(3) | After subsection (3C) insert— |
| |
“(3D) | In relation to a payment of first-year tax credit falling within |
| |
subsection (1)(g) above the material date is whichever is the later |
| |
| 15 |
(a) | the filing date for the company’s company tax return for the |
| |
accounting period for which the tax credit is claimed, and |
| |
(b) | the date on which the company tax return or amended |
| |
company tax return containing the claim for payment of the |
| |
tax credit is delivered to the Commissioners for Her |
| 20 |
Majesty’s Revenue and Customs. |
| |
| For this purpose “the filing date”, in relation to a company tax return, |
| |
has the same meaning as in Schedule 18 to the Finance Act 1998.” |
| |
(4) | In subsection (8A)(b)(ii), after “film tax credit” insert “or first-year tax credit |
| |
under Schedule A1 to the Capital Allowances Act”. |
| 25 |
(5) | In subsection (8BA), after “film tax credit” (in both places) insert “or first- |
| |
year tax credit under Schedule A1 to the Capital Allowances Act”. |
| |
| |
8 (1) | Schedule 18 to FA 1998 (company tax returns, assessments etc.) is amended |
| |
| 30 |
| |
(a) | after “capital allowances” insert “, first-year tax credits”, and |
| |
(b) | after “79” insert “, 83ZA”. |
| |
(3) | In paragraph 52, after sub-paragraph (2) insert— |
| |
“(2A) | The provisions of paragraphs 41 and 45 to 48 relating to discovery |
| 35 |
assessments apply to an amount paid to a company by way of |
| |
first-year tax credit under Schedule A1 to the Capital Allowances |
| |
Act as if it were unpaid tax, but only to the extent that the |
| |
company was not, or is no longer, entitled to it.” |
| |
|
| |
|
| |
|
(4) | In paragraph 52(5), after paragraph (ae) insert— |
| |
“(af) | an amount of first-year tax credit under Schedule A1 to the |
| |
Capital Allowances Act paid to a company for an |
| |
| |
(5) | After paragraph 83 insert— |
| 5 |
“83ZA (1) | Subject as follows, this Part of this Schedule applies to claims for |
| |
a first-year tax credit under Schedule A1 to the Capital Allowances |
| |
Act as it applies to claims for allowances under that Act. |
| |
(2) | A company tax return in which a claim to a first-year tax credit is |
| |
| 10 |
(a) | the plant or machinery to which the relevant first-year |
| |
| |
(b) | the amount of the relevant first-year expenditure incurred |
| |
in respect of that plant or machinery, and |
| |
(c) | the date on which that expenditure was incurred. |
| 15 |
(3) | Where an order under section 45B or 45I of that Act (first-year |
| |
allowance available only if relevant certificate in force) applies in |
| |
relation to the plant or machinery, the company tax return must be |
| |
accompanied by the relevant certificate. |
| |
(4) | The company is liable to a penalty where it— |
| 20 |
(a) | fraudulently or negligently makes a claim for a first-year |
| |
tax credit which is incorrect, or |
| |
(b) | discovers that a claim for a first-year tax credit made by it |
| |
(neither fraudulently or negligently) is incorrect, and does |
| |
not remedy the error without unreasonable delay. |
| 25 |
(5) | The penalty is an amount not exceeding the excess first-year tax |
| |
credit claimed, that is the difference between— |
| |
(a) | the amount of the first-year tax credit to which the |
| |
company is entitled for the accounting period to which the |
| |
| 30 |
(b) | the amount of the first-year tax credit claimed by the |
| |
company for that period.” |
| |
| |
| |
9 | The amendments made by this Schedule have effect in relation to |
| 35 |
expenditure incurred on or after 1 April 2008. |
| |
|
| |
|
| |
|
| |
| |
Special rate expenditure and the special rate pool |
| |
| |
| |
| 5 |
1 | CAA 2001 is amended in accordance with this Part of this Schedule. |
| |
Special rate expenditure and the special rate pool |
| |
2 | After Chapter 10 insert— |
| |
| |
| 10 |
| |
104A | Special rate expenditure |
| |
(1) | “Special rate expenditure” means— |
| |
(a) | expenditure incurred on or after the relevant date to which |
| |
section 28 (thermal insulation) applies, |
| 15 |
(b) | expenditure incurred on or after that date to which section |
| |
33A (integral features) applies, |
| |
(c) | long-life asset expenditure (within the meaning of Chapter |
| |
10) incurred on or after that date, and |
| |
(d) | long-life asset expenditure (within the meaning of that |
| 20 |
Chapter) incurred before that date but allocated to a pool in a |
| |
chargeable period beginning on or after that date. |
| |
(2) | The relevant date is— |
| |
(a) | for corporation tax purposes, 1 April 2008, and |
| |
(b) | for income tax purposes, 6 April 2008. |
| 25 |
104B | Application of Chapter to part of expenditure |
| |
(1) | If part only of the capital expenditure on plant and machinery is |
| |
special rate expenditure— |
| |
(a) | the part which is such expenditure, and |
| |
(b) | the part which is not, |
| 30 |
| are to be treated for the purposes of this Act as expenditure on |
| |
separate items of plant or machinery. |
| |
(2) | For the purposes of subsection (1), all such apportionments are to be |
| |
made as are just and reasonable. |
| |
|
| |
|
| |
|
Rules applying to special rate expenditure |
| |
| |
(1) | Special rate expenditure to which this section applies, if allocated to |
| |
a pool, must be allocated to a class pool (“the special rate pool”). |
| |
(2) | This section applies to special rate expenditure if— |
| 5 |
(a) | it is incurred wholly and exclusively for the purposes of a |
| |
| |
(b) | it is not expenditure which is required to be allocated to a |
| |
| |
104D | Writing-down allowances at 10% |
| 10 |
(1) | The amount of the writing-down allowance to which a person is |
| |
entitled for a chargeable period in respect of expenditure which is |
| |
special rate expenditure is 10% of the amount by which AQE exceeds |
| |
| |
(2) | Subsection (1) applies even if the special rate expenditure is in a |
| 15 |
| |
(3) | In the case of expenditure in the special rate pool, this section is |
| |
subject to section 56A (writing-down allowance for small pools). |
| |
(4) | Subsections (3) and (4) of section 56 (proportionate increases or |
| |
reductions in amount in certain cases) apply for the purposes of |
| 20 |
subsection (1) of this section as they apply for the purposes of |
| |
subsection (1) of that section. |
| |
104E | Disposal value of special rate assets |
| |
(1) | This section applies if— |
| |
(a) | section 104D (writing-down allowances at 10%) has had |
| 25 |
effect in relation to any special rate expenditure incurred by |
| |
a person (“the taxpayer”), |
| |
(b) | any disposal event occurs in relation to the item on which the |
| |
expenditure was incurred, |
| |
(c) | the disposal value to be brought into account by the taxpayer |
| 30 |
would (but for this section) be less than the notional written- |
| |
down value of the item, and |
| |
(d) | the disposal event is part of, or occurs as a result of, a scheme |
| |
or arrangement the main purpose or one of the main |
| |
purposes of which is the obtaining by the taxpayer of a tax |
| 35 |
advantage under this Part. |
| |
(2) | The disposal value that the taxpayer must bring into account is the |
| |
notional written-down value of the item. |
| |
(3) | The notional written-down value is—![equation: plus[times[char[Q],char[E]],minus[char[A]]]](missing.gif) |
| |
| 40 |
| QE is the taxpayer’s expenditure on the item that is |
| |
qualifying expenditure, and |
| |
| A is the total of all allowances which could have been made |
| |
to the taxpayer in respect of that expenditure if— |
| |
|
| |
|
| |
|
(a) | that expenditure had been the only expenditure that |
| |
had ever been taken into account in determining the |
| |
taxpayer’s available qualifying expenditure, |
| |
(b) | where the item is a long-life asset, that expenditure |
| |
had not been prevented by the application of a |
| 5 |
monetary limit from being long-life asset |
| |
| |
(c) | all allowances had been made in full.” |
| |
| |
3 | In section 54(5) (the different kinds of pools), for “section 101 (long life |
| 10 |
assets);” substitute “section 104C (special rate expenditure);”. |
| |
4 | In section 56(2) (amount of allowances and charges), for paragraph (a) |
| |
| |
“(a) | section 104D (special rate expenditure: 10%), and”. |
| |
5 | In section 65(1) (final chargeable period), for paragraph (b) substitute— |
| 15 |
“(b) | a special rate pool,”. |
| |
6 | In section 66 (list of provisions about disposal values), for the entry relating |
| |
to section 104 substitute— |
| |
| | special rate expenditure: avoidance cases”. |
| | |
|
7 | In column 1 of the table in section 84 (cases in which short-life asset |
| 20 |
treatment is ruled out), for item 4 substitute— |
| |
“4 | The expenditure is special rate expenditure (see Chapter 10A).” |
| |
8 | Omit section 92 (application of Chapter 10 to part of expenditure). |
| |
9 | For section 101 (long-life asset pool) substitute— |
| |
“101 | Allocation of long-life asset expenditure to pool |
| 25 |
Chapter 10A (special rate expenditure and the special rate pool) |
| |
provides for long-life asset expenditure to be allocated to the special |
| |
| |
10 | For section 102 (6% writing-down allowance in respect of long-life asset |
| |
| 30 |
“102 | Writing-down allowance in respect of long-life asset expenditure |
| |
Chapter 10A (special rate expenditure and the special rate pool) |
| |
provides for the writing-down allowance to which a person is |
| |
entitled in respect of long-life asset expenditure.” |
| |
11 | Omit section 104 (disposal value of long-life assets). |
| 35 |
12 | In section 266(7) (certain provisions disapplied where election made under |
| |
| |
(a) | for “104” substitute “104E”, and |
| |
(b) | for “of long-life assets” substitute “in connection with special rate |
| |
| 40 |
|
| |
|
| |
|
13 | In Part 2 of Schedule 1 (index of defined expressions), insert at the |
| |
| |
| “special rate expenditure |
| | | | | | | | |
|
| 5 |
| |
| |
14 (1) | This Schedule has effect in relation to— |
| |
(a) | expenditure incurred on or after the relevant date, and |
| |
(b) | long-life asset expenditure (within the meaning of Chapter 10 of |
| 10 |
CAA 2001) incurred before the relevant date but allocated to a pool |
| |
in a chargeable period beginning on or after that date. |
| |
(2) | Sub-paragraph (1) is subject to— |
| |
(a) | section 80 (which provides that certain other long-life asset |
| |
expenditure is to be treated as special rate expenditure for the |
| 15 |
purposes of CAA 2001), and |
| |
| |
(3) | The relevant date is— |
| |
(a) | for corporation tax purposes, 1 April 2008, and |
| |
(b) | for income tax purposes, 6 April 2008. |
| 20 |
Sale between connected persons |
| |
15 (1) | This paragraph applies where, on or after the relevant date— |
| |
(a) | there is a sale of a pre-commencement integral feature, |
| |
(b) | the buyer and seller are connected persons (within the meaning of |
| |
section 575 of CAA 2001), and |
| 25 |
(c) | the buyer’s expenditure on the integral feature would (apart from |
| |
this paragraph) be special rate expenditure. |
| |
(2) | An integral feature is a pre-commencement integral feature if the seller— |
| |
(a) | incurred expenditure on it before the relevant date, or |
| |
(b) | incurred expenditure on it on or after that date which was not |
| 30 |
qualifying expenditure because of a previous application of this |
| |
| |
(3) | The buyer’s expenditure on the integral feature is not qualifying |
| |
| |
(a) | the original expenditure was qualifying expenditure, or |
| 35 |
(b) | the buyer’s expenditure would have been qualifying expenditure, |
| |
had it been incurred at the time the original expenditure was |
| |
| |
(4) | The “original expenditure”— |
| |
|
| |
|