Corporation Tax Bill

House of Commons

Session 2008 - 09
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Corporation Tax Bill

Corporation Tax Bill
Part 14 — Remediation of contaminated land
Chapter 1 — Introduction
534

Basic definitions
1144
“Qualifying land remediation expenditure”
(1)
For the purposes of this Part a company’s “qualifying land remediation
expenditure” means expenditure incurred by it in relation to which each of
conditions A to E is met.
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(2)
Condition A is that it is expenditure on land all or part of which is in a
contaminated state (see section 1145).
(3)
Condition B is that the expenditure would not have been incurred if the land
had not been in a contaminated state.
(4)
Condition C is that it is expenditure on relevant land remediation undertaken
10
by the company itself or on its behalf (see section 1146).
(5)
Condition D is that the expenditure is—
(a)
incurred on staffing costs (see section 1170),
(b)
incurred on materials (see section 1172), or
(c)
qualifying expenditure on sub-contracted land remediation (see
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sections 1174 to 1176).
(6)
Condition E is that the expenditure is not subsidised (see section 1177).
(7)
See also section 1173 for provision about some cases in which condition B is
treated as met.
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Land “in a contaminated state”
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(1)
For the purposes of this Part land is in a contaminated state if (and only if) it is
in such a condition, because of substances in, on or under the land, that—
(a)
harm is being caused or there is the possibility of harm being caused, or
(b)
pollution of controlled waters is being, or is likely to be, caused.
(2)
For the purposes of this Part a nuclear site is not land in a contaminated state.
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(3)
“Nuclear site” means—
(a)
any site in respect of which a nuclear site licence is for the time being in
force, or
(b)
any site in respect of which, after the revocation or surrender of a
nuclear site licence, the period of responsibility of the licensee has not
30
yet come to an end.
(4)
In subsection (3) “nuclear site licence”, “licensee” and “period of responsibility”
have the same meaning as in the Nuclear Installations Act 1965 (c. 57).
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“Relevant land remediation”
(1)
For the purposes of this Part “relevant land remediation”, in relation to land
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acquired by a company, means—
(a)
activities in relation to which conditions A and B are met, and
(b)
if there are such activities, relevant preparatory activity.
(2)
Condition A is that the activities comprise the doing of any works, the carrying
out of any operations or the taking of any steps in relation to—
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Corporation Tax Bill
Part 14 — Remediation of contaminated land
Chapter 2 — Reliefs for expenditure on contaminated land
535

(a)
the land in question,
(b)
any controlled waters affected by that land, or
(c)
any land adjoining or adjacent to that land.
(3)
Condition B is that the purpose of the activities is—
(a)
to prevent or minimise, or remedy or mitigate the effects of, any harm,
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or any pollution of controlled waters, by virtue of which the land is in
a contaminated state, or
(b)
to restore the land or waters to their former state.
(4)
For the purposes of subsection (1)(b) “relevant preparatory activity” means
activity—
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(a)
which comprises the doing of anything for the purpose of assessing the
condition of—
(i)
the land in question,
(ii)
any controlled waters affected by that land, or
(iii)
any land adjoining or adjacent to that land, and
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(b)
which is connected to such activities within subsection (1)(a) as are
undertaken by the company itself or on its behalf.
(5)
For the purposes of this section controlled waters are “affected by” land in a
contaminated state if (and only if) the land in question is in such a condition,
because of substances in, on or under the land, that pollution of those waters is
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being, or is likely to be, caused.
Chapter 2
Reliefs for expenditure on contaminated land
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Deduction for capital expenditure
(1)
A company is entitled to relief for an accounting period if conditions A, B and
25
C are met.
(2)
Condition A is that land in the United Kingdom is, or has been, acquired by the
company for the purposes of a UK property business or a trade carried on by it.
(3)
Condition B is that at the time of the acquisition all or part of the land is or was
in a contaminated state.
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(4)
Condition C is that the company incurs capital expenditure which is qualifying
land remediation expenditure in respect of the land.
(5)
For the company to obtain the relief it must make an election.
(6)
The relief is that for corporation tax purposes the capital expenditure is
allowed as a deduction in calculating the profits of the UK property business
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or the trade for the period in which the expenditure is incurred.
(7)
For the purposes of this section capital expenditure incurred for the purposes
of a UK property business or a trade by a company about to carry on the
business or trade is to be treated as incurred by the company—
(a)
on the first day on which it does carry it on, and
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(b)
in the course of doing so.

Corporation Tax Bill
Part 14 — Remediation of contaminated land
Chapter 2 — Reliefs for expenditure on contaminated land
536

(8)
Relief is not available under this section in relation to so much of the qualifying
land remediation expenditure as represents capital expenditure in respect of
which an allowance has been, or may be, made under the enactments relating
to capital allowances.
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Election under section 1147
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(1)
An election under section 1147 must specify the accounting period in respect
of which it is made.
(2)
The election must be made by notice in writing to an officer of Revenue and
Customs.
(3)
The notice must be given before the end of the period of two years beginning
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immediately after the end of the accounting period to which the election
relates.
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Additional deduction for qualifying land remediation expenditure
(1)
A company is entitled to corporation tax relief for an accounting period if each
of conditions A to D is met.
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(2)
Condition A is that land in the United Kingdom is, or has been, acquired by the
company for the purposes of a UK property business or a trade carried on by it.
(3)
Condition B is that at the time of acquisition all or part of the land is or was in
a contaminated state.
(4)
Condition C is that the company carries on a UK property business or a trade
20
in the accounting period.
(5)
Condition D is that the company incurs qualifying land remediation
expenditure in respect of the land which is allowable as a deduction in
calculating for corporation tax purposes the profits of the business or the trade
for the period.
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(6)
For the company to obtain the relief it must make a claim.
(7)
The relief is an additional deduction in calculating the profits of the business
or the trade for the period.
(8)
The amount of the additional deduction is 50% of the qualifying land
remediation expenditure.
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1150
No relief if company responsible for contamination
A company is not entitled to relief under this Chapter in respect of expenditure
on land all or part of which is in a contaminated state if the land is in that state
wholly or partly as a result of any thing done, or omitted to be done, at any time
by—
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(a)
the company, or
(b)
a person with a relevant connection to the company (see section 1178).

Corporation Tax Bill
Part 14 — Remediation of contaminated land
Chapter 3 — Land remediation tax credit
537

Chapter 3
Land remediation tax credit
Entitlement and payment
1151
Entitlement to and payment of tax credit
(1)
A company is entitled to a land remediation tax credit for an accounting period
5
if it has a qualifying land remediation loss in the period (see section 1152).
(2)
For the company to obtain a land remediation tax credit in respect of all or part
of the qualifying land remediation loss it must make a claim.
(3)
The amount of a land remediation tax credit to which the company is entitled
is determined in accordance with section 1154.
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(4)
If a company claims a land remediation tax credit to which it is entitled for an
accounting period, an officer of Revenue and Customs must pay to the
company the amount of the credit.

This is subject to section 1155.
(5)
See also section 1158, which restricts the carry forward of losses where a
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company claims a land remediation tax credit.
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Meaning of “qualifying land remediation loss”
(1)
For the purposes of this Chapter a company has a “qualifying land remediation
loss” in an accounting period if in the period—
(a)
it obtains an additional deduction under section 1149 in calculating the
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profits of a UK property business or a trade, and
(b)
it makes a UK property business loss in the business or a trading loss in
the trade.
(2)
The amount of the qualifying land remediation loss is—
(a)
so much of the UK property business loss or trading loss as is
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unrelieved (see section 1153), or
(b)
if less, 150% of the qualifying land remediation expenditure in respect
of which the relief was obtained.
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Amount of a loss which is “unrelieved”
(1)
The amount of a UK property business loss or trading loss that is “unrelieved”
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is the amount of the loss reduced by—
(a)
any relief obtained by the company under section 392A(1) of ICTA, or
that was or could have been obtained by it making a claim under
section 393A(1)(a) of ICTA, to set the loss against profits of the same
accounting period,
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(b)
any other relief obtained by the company in respect of the loss,
including relief under section 393A(1)(b) of ICTA (losses set against
profits of an earlier accounting period), and
(c)
any loss surrendered under section 403(1) of ICTA (surrender of relief
to group or consortium members).
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(2)
No account is to be taken for this purpose of—

Corporation Tax Bill
Part 14 — Remediation of contaminated land
Chapter 3 — Land remediation tax credit
538

(a)
any UK property business losses or trading losses brought forward
from an earlier accounting period under section 392A(2) or 393(1) of
ICTA, or
(b)
any trading losses carried back from a later accounting period under
section 393A(1)(b) of ICTA.
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(3)
Subsections (4) to (7) apply (instead of subsection (1)) to determine the amount
of a UK property business loss that is “unrelieved” in an accounting period
(“the relevant accounting period”) in a case where, as a result of section
432AB(3) of ICTA, the loss is treated for the purposes of section 76 of that Act
as expenses payable which fall to be brought into account at Step 3 in
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subsection (7) of that section.
(4)
If in the relevant accounting period no amount falls to be carried forward to a
subsequent accounting period under section 76(12) of ICTA (unrelieved
expenses carried forward), no amount of the UK property business loss is
unrelieved.
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(5)
If in the relevant accounting period there is an amount which falls to be carried
forward to a subsequent accounting period under section 76(12) of ICTA, the
amount of the UK property business loss that is unrelieved is—
(a)
the amount which so falls to be carried forward, or
(b)
if less, the amount of the UK property business loss.
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(6)
In determining for the purposes of subsection (4) or (5) whether there is an
amount which falls to be carried forward to a subsequent accounting period
under section 76(12) of ICTA, no account is to be taken of the amounts specified
in subsection (7).
(7)
Those amounts are amounts—
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(a)
brought forward from an earlier accounting period, and
(b)
treated for the purposes of section 76 of ICTA as expenses payable
which fall to be brought into account for the relevant accounting period
in accordance with—
(i)
Step 7 in section 76(7) of ICTA, as a result of a previous
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application of section 76(12) or (13) of that Act, or
(ii)
Step 3 in section 76(7) of ICTA, as a result of section 391 of this
Act (carry forward of surplus deficit).
(8)
If—
(a)
the company is an insurance company, and
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(b)
it is treated under section 432AA of ICTA as carrying on more than one
UK property business,

references in this section to a UK property business loss are to be read in
accordance with section 432AB(4) of ICTA (aggregation of losses).
Amount of tax credit
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1154
Amount of tax credit
(1)
The amount of the land remediation tax credit to which a company is entitled
for an accounting period is 16% of the amount of the qualifying land
remediation loss for the period.

Corporation Tax Bill
Part 14 — Remediation of contaminated land
Chapter 3 — Land remediation tax credit
539

(2)
The Treasury may by order replace the percentage for the time being specified
in subsection (1) with a different percentage.
(3)
An order under subsection (2) may contain incidental, supplemental,
consequential and transitional provision and savings.
Supplementary
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1155
Payment of tax credit
(1)
This section applies if a land remediation tax credit for an accounting period is
payable to a company.
(2)
The amount payable in respect of—
(a)
the land remediation tax credit, or
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(b)
interest on the credit payable under section 826 of ICTA,

may be applied in discharging any liability of the company to pay corporation
tax.
(3)
So far as the amount is so applied, the duty of the officer of Revenue and
Customs to pay the credit under section 1151(4) is discharged.
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(4)
Subsection (5) applies if the company’s tax return for the accounting period is
enquired into by an officer of Revenue and Customs.
(5)
In that case—
(a)
no payment in respect of the land remediation tax credit for the period
need be made before the officer’s enquiries are completed (see
20
paragraph 32 of Schedule 18 to FA 1998), but
(b)
an officer may make a payment on a provisional basis of such amount
as the officer thinks fit.
(6)
No payment need be made in respect of the land remediation tax credit if the
company has outstanding PAYE and NIC liabilities for the period.
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(7)
A company has outstanding PAYE and NIC liabilities for an accounting period
if it has not paid to an officer of Revenue and Customs any amount that it is
required to pay—
(a)
under PAYE regulations, or
(b)
in respect of Class 1 national insurance contributions,
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for payment periods ending in the accounting period.
(8)
“Payment period” means a period—
(a)
which ends on the 5th day of a month, and
(b)
for which the company is liable to account for income tax and national
insurance contributions to an officer of Revenue and Customs.
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1156
Tax credit payment not income of company
A payment in respect of a land remediation tax credit is not income of the
company for any tax purposes.