Taxes Consolidation Act 1997

290.—Where machinery or plant, in the case of which any of the events mentioned in section 288(1) has occurred, is replaced by the owner of the machinery or plant and a balancing charge is to be made on that owner by reason of that event, or but for this section a balancing charge would have been made on that owner by reason of that event, then, if by notice in writing to the inspector that owner so elects, the following provisions shall apply:

(a) if the amount on which the charge would have been made is greater than the capital expenditure on providing the new machinery or plant—

(i) the charge shall be made only on an amount equal to the difference,

(ii) no initial allowance, no balancing allowance and no wear and tear allowance shall be made in respect of the new machinery or plant or the expenditure on the provision of the new machinery or plant, and

(iii) in considering whether any, and if so what, balancing charge is to be made in respect of the expenditure on the new machinery or plant, there shall be deemed to have been made in respect of that expenditure an initial allowance equal to the full amount of that expenditure;

(b) if the capital expenditure on providing the new machinery or plant is equal to or greater than the amount on which the charge would have been made—

(i) the charge shall not be made,

(ii) the amount of any initial allowance in respect of that expenditure and the amount of any wear and tear allowance shall be calculated as if the expenditure had been reduced by the amount on which the charge would have been made, and

(iii) in considering whether any, and if so what, balancing allowance or balancing charge is to be made in respect of the new machinery or plant, there shall be deemed to have been granted in respect of the new machinery or plant an initial allowance equal to the amount on which the charge would have been made, in addition to any initial allowance actually granted in respect of the new machinery or plant.

291 Computer software. [ITA67 s241A(1) and (2); FA94 s24(a)]

291.—(1) Where a person carrying on a trade incurs capital expenditure in acquiring for the purposes of the trade a right to use or otherwise deal with computer software, then, for the purposes of this Chapter and Chapter 4 of this Part—

(a) the right and the software to which the right relates shall be treated as machinery or plant,

(b) such machinery or plant shall be treated as having been provided for the purposes of the trade, and

(c) for so long as the person is entitled to the right, that machinery or plant shall be treated as belonging to that person.

(2) In any case where—

(a) a person carrying on a trade incurs capital expenditure on the provision of computer software for the purposes of the trade, and

(b) in consequence of the person incurring that expenditure, the computer software belongs to that person but does not constitute machinery or plant,

then, for the purposes of this Chapter and Chapter 4 of this Part, the computer software shall be treated as machinery or plant.

292 Meaning of “amount still unallowed”. [ITA67 s274; CTA76 s21(1) and Sch1 par30]

292.—References in this Chapter to the amount still unallowed as at any time of any expenditure on the provision of machinery or plant shall be construed as references to the amount of that expenditure less—

(a) any initial allowance made or deemed under this Chapter to have been made in respect of that expenditure to the person who incurred the expenditure,

(b) any wear and tear allowances made or deemed under this Chapter to have been made to that person in respect of the machinery or plant on the provision of which the expenditure was incurred, being allowances made for any chargeable period such that the chargeable period or its basis period ended before the time in question,

(c) any scientific research allowance (within the meaning of section 288(4)(a)) made to that person in respect of the expenditure, and

(d) any balancing allowance made to that person in respect of the expenditure.

293 Application to partnerships. [ITA67 s275; CTA76 s21(1) and Sch1 par31]

293.—(1) (a) Where, after the setting up and on or before the permanent discontinuance of a trade which at any time is carried on in partnership, any event occurs which gives rise or may give rise to a balancing allowance or balancing charge in respect of machinery or plant—

(i) any balancing allowance or balancing charge which, if the trade had at all times been carried on by one and the same person, would have been made to or on that person in respect of that machinery or plant by reason of that event shall, subject to section 1010, be made to or on the person or persons carrying on the trade in the chargeable period related to that event (in this paragraph referred to as “the relevant person or persons”), and

(ii) the amount of any such allowance or charge shall be computed as if the relevant person or persons had at all times been carrying on the trade and as if everything done to or by the predecessors of the relevant person or persons in the carrying on of the trade had been done to or by the relevant person or persons.

(b) Notwithstanding paragraph (a), in applying section 288(4) to any balancing charge to be made in accordance with that paragraph, the allowances made in respect of the machinery or plant for the year beginning on the 6th day of April, 1959, or for any earlier year of assessment shall not be taken to include allowances made to, or attributable to the shares of, persons who were not, either alone or in partnership with other persons, carrying on the trade at the beginning of the year beginning on the 6th day of April, 1959.

(2) (a) In this subsection, “several trade” has the meaning assigned to it by section 1008.

(b) In taxing the several trade of any partner in a partnership, the same allowances and charges shall be made in respect of machinery or plant used for the purposes of that trade, and belonging to one or more of the partners but not being partnership property, as would be made if the machinery or plant had at all material times belonged to all the partners and been partnership property and everything done by or to any of the partners in relation to the machinery or plant had been done by or to all the partners.

(3) Notwithstanding section 288, a sale or gift of machinery or plant used for the purposes of a trade carried on in partnership, being a sale or gift by one or more of the partners to one or more of the partners, shall not be treated as an event giving rise to a balancing allowance or balancing charge if the machinery or plant continues to be used after the sale or gift for the purposes of that trade.

(4) References in subsections (2) and (3) to use for the purposes of a trade do not include references to use in pursuance of a letting by the partner or partners in question to the partnership or to use in consideration of the making to the partner or partners in question of any payment which may be deducted in computing under section 1008(3) the profits or gains of the trade.

294 Machinery or plant used partly for non-trading purposes. [ITA67 s276; FA90 s79]

294.—Where an event occurs which gives rise or might give rise to a balancing allowance or balancing charge to or on any person and the machinery or plant concerned is machinery or plant which—

(a) has been used by that person for the purposes of a trade carried on by that person and, in relation to machinery or plant provided for use for the purposes of a trade on or after the 1st day of April, 1990, while so used, was used wholly and exclusively for those purposes, and

(b) has also been used for other purposes,

then, in determining the amount of the allowance or, as the case may be, the amount on which the charge is to be made, regard shall be had to all the relevant circumstances and in particular to the extent of the use for those other purposes, and there shall be made to or on that person an allowance of such an amount or a charge on such an amount, as the case may be, as may be just and reasonable.

295 Option in case of succession under will or intestacy. [ITA67 s278]

295.—Where a person succeeds to a trade as a beneficiary under the will or on the intestacy of a deceased person who carried on that trade, the following provisions shall, if the beneficiary by notice in writing to the inspector so elects, apply in relation to any machinery or plant previously owned by the deceased person and used by the deceased person for the purposes of that trade:

(a) the reference in section 313 to the price which the machinery or plant would have fetched if sold in the open market shall, in relation to the succession and any previous succession occurring on or after the death of the deceased, be deemed to be a reference to that price or the amount of the expenditure on the provision of the machinery or plant still unallowed immediately before the succession in question, whichever is the lower, and

(b) notwithstanding anything in that section, such balancing charge, if any, shall be made on the beneficiary on any event occurring after the succession as would have been made on the deceased if he or she had not died and had continued to own the machinery or plant and had done all such things and been allowed all such allowances in connection with the machinery or plant as were done by or allowed to the beneficiary or the successor on any previous succession mentioned in paragraph (a).

296 Balancing allowances and balancing charges: wear and tear allowances deemed to have been made in certain cases. [ITA67 s279; CTA76 s21(1) and Sch1 par32]

296.—(1) In determining whether any, and if so what, balancing allowance or balancing charge is to be made to or on any person for any chargeable period in taxing a trade, there shall be deemed to have been made to that person, for every previous chargeable period in which the machinery or plant belonged to that person and which is a chargeable period to be taken into account for the purpose of this section, such wear and tear allowance or greater wear and tear allowance, if any, in respect of the machinery or plant as would have been made to that person if all the conditions specified in subsection (3) had been fulfilled in relation to every such previous chargeable period.

(2) There shall be taken into account for the purposes of this section every previous chargeable period in which the machinery or plant belonged to the person and—

(a) during which the machinery or plant was not used by the person for the purposes of the trade,

(b) during which the trade was not carried on by the person,

(c) during which the trade was carried on by the person in such circumstances that, otherwise than by virtue of Chapter I of Part XXV of the Income Tax Act, 1967, or Part V of the Corporation Tax Act, 1976, the full amount of the profits or gains of the trade was not liable to be charged to tax,

(d) for which the whole or a part of the tax chargeable in respect of the profits of the trade was not payable by virtue of Chapter II of Part XXV of the Income Tax Act, 1967, or

(e) for which the tax payable in respect of the profits of the trade was reduced by virtue of Chapter III or IV of Part XXV of the Income Tax Act, 1967, or Part IV of the Corporation Tax Act, 1976.

(3) The conditions referred to in subsection (1) are—

(a) that the trade had been carried on by the person in question since the date on which that person acquired the machinery or plant and had been so carried on by that person in such circumstances that the full amount of the profits or gains of the trade was liable to be charged to tax,

(b) that the trade had at no time consisted wholly or partly of exempted trading operations within the meaning of Chapter I of Part XXV of the Income Tax Act, 1967, or Part V of the Corporation Tax Act, 1976,

(c) that the machinery or plant had been used by that person solely for the purposes of the trade since that date, and

(d) that a proper claim had been duly made by that person for wear and tear allowance in respect of the machinery or plant for every relevant chargeable period.

(4) In the case of a company (within the meaning of section 4(1)), subsection (3)(a) shall not alter the periods which are to be taken as chargeable periods but, if during any time after the 5th day of April, 1976, and after the company acquired the machinery or plant, the company has not been within the charge to corporation tax, any year of assessment or part of a year of assessment falling within that time shall be taken as a chargeable period as if it had been an accounting period of the company.

(5) Nothing in this section shall affect section 288(4).

297 Subsidies towards wear and tear. [ITA67 s280; CTA76 s21(1) and Sch1 par33]

297.—(1) Where—

(a) an event occurs which gives rise or might give rise to a balancing allowance or balancing charge to or on any person in respect of any machinery or plant provided or used by that person for the purposes of a trade, and

(b) any sums which—

(i) are in respect of, or take account of, the wear and tear to the machinery or plant occasioned by its use for the purposes of the trade, and

(ii) do not fall to be taken into account as that person's income or in computing the profits or gains of any trade carried on by that person,

have been paid, or are to be payable, to that person directly or indirectly,

then, in determining whether any and, if so, what balancing allowance or balancing charge is to be made to or on that person, there shall be deemed to have been made to that person for the chargeable period related to the event a wear and tear allowance in respect of the machinery or plant of an amount equal to the total amount of those sums.

(2) Nothing in this section shall affect section 288(4).

298 Allowances to lessors. [ITA67 s241(5), s252 and s281; CTA76 s21(1) and Sch1 par6 and par16; FA80 s17(3)]

298.—(1) Where machinery or plant is let on such terms that the burden of the wear and tear of the machinery or plant falls directly on the lessor, the lessor shall be entitled, on making a claim to the inspector within 24 months after the end of the chargeable period, to—

(a) an initial allowance under section 283, and

(b) a wear and tear allowance under section 284,

in relation to the machinery or plant, equal to the amount which might have been allowed if during the period of the letting the machinery or plant were in use for the purposes of a trade carried on by the lessor.

(2) Where machinery or plant is let on such terms as are referred to in subsection (1), the preceding provisions of this Chapter, in so far as they relate to balancing allowances and balancing charges, shall apply in relation to the lessor as if the machinery or plant were, during the term of the letting, in use for the purposes of a trade carried on by the lessor.

299 Allowances to lessees. [ITA67 s241(2) and s252; FA67 s11(3); FA71 s26(3); CTA76 s21(1) and Sch1 par6, par16, par53 and par60]

299.—(1) Where machinery or plant is let to the person by whom the trade is carried on, on the terms of that person being bound to maintain the machinery or plant and deliver it over in good condition at the end of the lease, and if the burden of the wear and tear of the machinery or plant will in fact fall directly on that person, then, for the purposes of sections 283 and 284, the capital expenditure on the provision of the machinery or plant shall be deemed to have been incurred by that person and the machinery or plant shall be deemed to belong to that person.

(2) Subsection (2) of section 285 shall not apply to qualifying machinery or plant (within the meaning of that section) which is let to a person on the terms mentioned in subsection (1), unless the contract of letting provides that the person shall or may become the owner of the machinery or plant on the performance of the contract, and, where the contract so provides but without becoming the owner of the machinery or plant the person ceases to be entitled (otherwise than on his or her death) to the benefit of the contract in so far as it relates to the machinery or plant, subsection (2) of section 285 shall be deemed not to have applied in relation to the machinery or plant and accordingly there shall be made all such additional assessments and adjustments of assessments as may be appropriate.

300 Manner of making allowances and charges. [ITA67 s241(1)(c), s251(1) and s282; CTA76 s21(1) and Sch1 par15, par34; FA96 s132(1) and Sch5 PtI par1(12)]

300.—(1) Any allowance or charge made to or on any person under the preceding provisions of this Chapter shall, unless it is made under or by virtue of section 298, be made to or on that person in taxing such person's trade.

(2) Any initial allowance or wear and tear allowance made under or by virtue of section 298(1) or any balancing allowance made under or by virtue of section 298(2) shall be made by means of discharge or repayment of tax, and shall be available primarily against income from the letting of machinery or plant.

(3) Any balancing charge made under or by virtue of section 298(2) shall be made under Case IV of Schedule D.

301 Application to professions, employments and offices. [ITA67 s241(10), s241A(3), s253 and s283(1); FA70 s14(4); CTA76 s21(1) and Sch1 par6; FA97 s22, s146(1) and Sch9 PtI par1(17)]

301.—(1) The preceding provisions of this Chapter (other than sections 283, 285 and 286) shall, with any necessary modifications, apply in relation to professions, employments and offices as they apply in relation to trades.

(2) Sections 283 and 285 shall, with any necessary modifications, apply in relation to professions as they apply in relation to trades.

CHAPTER 3 Dredging: initial allowances and annual allowances

302 Interpretation (Chapter 3). [ITA67 s294(6), (8) and (10); CTA76 s21(1) and Sch1 par43]

302.—(1) In this Chapter—

“dredging” does not include things done otherwise than in the interests of navigation, but (subject to that) includes the removal of anything forming part of or projecting from the bed of the sea or of any inland water, by whatever means it is removed and whether or not at the time of removal it is wholly or partly above water, and also includes the widening of an inland waterway in the interests of navigation;

“qualifying trade” means any trade or undertaking which, or a part of which, complies with either of the following conditions—

(a) that it consists of the maintenance or improvement of the navigation of a harbour, estuary or waterway, or

(b) that it is for a purpose set out in section 268(1),

but, where part only of a trade or undertaking complies with paragraph (a) or (b), section 303(5) shall apply as if the part which does and the part which does not so comply were separate trades.

(2) For the purposes of this Chapter, the first relevant chargeable period, in relation to expenditure incurred by any person, shall be the chargeable period related to the following event or occasion—

(a) the incurring of the expenditure, or

(b) in the case of expenditure for which allowances are to be made by virtue of section 303(6), the occasion when that person first both carries on the trade or part of the trade for the purposes of which the expenditure was incurred, and occupies for the purposes of that trade or part of the trade the dock or other premises in connection with which the expenditure was incurred.

303 Allowances for expenditure on dredging. [ITA67 s294(1) to (5), (7), (9), (11) and (12); CTA76 s21(1) and Sch1 par43]

303.—(1) (a) Subject to this section, where for the purposes of any qualifying trade carried on by a person the person incurs capital expenditure on dredging, and either the trade consists of the maintenance or improvement of the navigation of a harbour, estuary or waterway or the dredging is for the benefit of vessels coming to, leaving or using any dock or other premises occupied by the person for the purposes of the trade, then—

(i) an initial allowance equal to 10 per cent of the expenditure shall be made for the first relevant chargeable period to the person incurring the expenditure, and

(ii) writing-down allowances shall be made in respect of that expenditure to the person for the time being carrying on the trade during a writing-down period of 50 years beginning with the first relevant chargeable period; but, where a writing-down allowance is to be made for a year of assessment to such a person and such person is within the charge to income tax in respect of the trade for part only of that year, that part shall be treated as a separate chargeable period for the purposes of computing allowances under this section.

(b) This subsection shall not apply to any expenditure incurred before the 30th day of September, 1956.

(2) Where the trade is permanently discontinued in any chargeable period, then, for that chargeable period there shall be made to the person last carrying on the trade, in addition to any other allowance made to that person, an allowance equal to the amount of the expenditure less the allowances made in respect of the expenditure under subsection (1) for that and previous chargeable periods.

(3) For the purposes of this section, a trade shall not be treated by virtue of the Income Tax Acts as discontinued on a change in the persons engaged in carrying it on.

(4) Any allowance under this section shall be made in taxing the trade.

(5) Where expenditure is incurred partly for the purposes of a qualifying trade and partly for other purposes, subsection (1) shall apply to so much only of that expenditure as on a just apportionment ought fairly to be treated as incurred for the purposes of that trade.

(6) Where a person incurs capital expenditure for the purposes of a trade or part of a trade not yet carried on by the person but with a view to carrying it on, or incurs capital expenditure in connection with a dock or other premises not yet occupied by the person for the purposes of a qualifying trade but with a view to so occupying the dock or premises, subsections (1) to (5) shall apply as if the person had been carrying on the trade or part of the trade or occupying the dock or premises for the purposes of the qualifying trade, as the case may be, at the time when the expenditure was incurred.

(7) Where a person contributes a capital sum to expenditure on dredging incurred by another person, the person shall for the purposes of this section be treated as incurring capital expenditure on that dredging equal to the amount of the contribution, and the capital expenditure incurred by the other person on that dredging shall for those purposes be deemed to be reduced by the amount of the contribution.

(8) No allowance shall be made by virtue of this section in respect of any expenditure if for the same or any other chargeable period an allowance is or can be made in respect of that expenditure under Chapter 1 of this Part.

(9) Notwithstanding any other provision of this section, in determining the allowances to be made under this section in any particular case, there shall be deemed to have been made in that case all such allowances (other than initial allowances) as could have been made if this section had always applied.

CHAPTER 4 Miscellaneous and general

304 Income tax: allowances and charges in taxing a trade, etc. [ITA67 s241(3) and (4), s251(5), s252, s253, s254(5) and (6), s295, CTA76 s21(1) and Sch1 par6, par15, par16, par17 and par44]

304.—(1) This section and section 305 shall apply as respects allowances and charges which are to be made under this Part as it applies for the purposes of income tax.

(2) Any claim by a person for an allowance under this Part in charging profits or gains of any description shall be included in the annual statement required to be delivered under the Income Tax Acts of those profits or gains, and the allowance shall be made as a deduction in charging those profits or gains.

(3) (a) A claim for an industrial building allowance under section 271 shall be accompanied by a certificate signed by the claimant (which shall be deemed to form part of the claim) stating that the expenditure was incurred on the construction of an industrial building or structure and giving such particulars as show that the allowance is to be made.

(b) A claim for an initial allowance under section 283 shall be accompanied by a certificate signed by the claimant (which shall be deemed to form part of the claim) stating that the expenditure was incurred on new machinery or new plant and giving such particulars as show that the allowance is to be made.

(4) Subject to section 278(2), where full effect cannot be given in any year to any allowance to be made under this Part in taxing a trade owing to there being no profits or gains chargeable for that year, or owing to the profits or gains chargeable being less than the allowance, then, the allowance or part of the allowance to which effect has not been given, as the case may be, shall, for the purpose of making the assessment to income tax for the following year, be added to the amount of the allowances to be made under this Part in taxing the trade for that following year, and be deemed to be part of those allowances, or, if there is no such allowance for that following year, be deemed to be the allowance for that following year, and so on for succeeding years.

(5) Any charge to be made under this Part on a person for any chargeable period in taxing the person's trade or in charging the person's income under Case V of Schedule D shall be made by means of an assessment in addition to any other assessment to be made on the person for that period.

(6) (a) The preceding provisions of this section (other than subsection (3)) shall apply in relation to professions, employments and offices as they apply in relation to trades.

(b) Subsection (3)(b) shall, with any necessary modifications, apply in relation to professions as it applies in relation to trades.

305 Income tax: manner of granting, and effect of, allowances made by means of discharge or repayment of tax. [ITA67 s254(1)(e), s296(1), (3), (4) and (5), F(MP)A68 s3(2) and Sch1; CTA76 s21(1) and Sch1 par17; FA80 s17(1)]

305.—(1) (a) Where under this Part an allowance is to be made to a person for any year of assessment which is to be given by means of discharge or repayment of tax, and is to be available or available primarily against a specified class of income, the amount of the allowance shall be deducted from or set off against the person's income of that class for that year of assessment and, if the amount to be allowed is greater than the amount of the person's income of that class for that year of assessment, the balance shall be deducted from or set off against the person's income of that class for the next year of assessment, and so on for subsequent years of assessment, and tax shall be discharged or repaid accordingly.

(b) Notwithstanding paragraph (a), where an allowance referred to in that paragraph is available primarily against income of the specified class and the amount of the allowance is greater than the amount of the person's income of that class for the first-mentioned year of assessment, the person may, by notice in writing given to the inspector not later than 2 years after the end of the year of assessment, elect that the excess shall be deducted from or set off against the person's other income for that year of assessment, and it shall be deducted from or set off against that income and tax shall be discharged or repaid accordingly and only the excess, if any, of the amount of the allowance over all the person's income for that year of assessment shall be deducted from or set off against the person's income of the specified class for succeeding years.

(2) Any claim for an allowance mentioned in subsection (1) shall be made to and determined by the inspector, but any person aggrieved by any decision of the inspector on any such claim may, on giving notice in writing to the inspector within 21 days after the notification to that person of the decision, appeal to the Appeal Commissioners.

(3) The Appeal Commissioners shall hear and determine an appeal to them under subsection (2) as if it were an appeal against an assessment to income tax, and the provisions of the Income Tax Acts relating to the rehearing of an appeal and to the statement of a case for the opinion of the High Court on a point of law shall, with the necessary modifications, apply accordingly.

(4) Where any person, for the purpose of obtaining for that person or any other person any relief from or repayment of tax in respect of an allowance mentioned in subsection (1), knowingly makes any false statement or false representation, that person shall be liable to a penalty of £500.

306 Meaning of basis period. [ITA67 s297; CTA76 s21(1) and Sch1 par45; FA90 s22(1)(b); FA96 s132(1) and Sch5 PtI par1(13)]

306.—(1) In this Part, as it applies for income tax purposes, “basis period” has the meaning assigned to it by this section.

(2) (a) Subject to paragraph (b), in the case of a person to whom an allowance or on whom a charge is to be made under Case I of Schedule D in charging the profits or gains of the person's trade or under Case V of Schedule D in charging income arising from rents or receipts in respect of premises or easements, the person's basis period for any year of assessment shall be the period on the profits or gains of which income tax for that year is to be finally computed under Case I of Schedule D in respect of the trade in question or, as the case may be, under Case V of Schedule D in respect of the income arising from rents or receipts in respect of premises or easements or, where by virtue of the Income Tax Acts the profits or gains or income of any other period are to be taken to be the profits or gains or income of that period, that other period.

(b) In the case of any trade—

(i) where 2 basis periods overlap, the period common to both shall be deemed for the purpose of this subsection to fall in the first basis period only,

(ii) where there is an interval between the end of the basis period for one year of assessment and the basis period for the next year of assessment, then, unless the second-mentioned year of assessment is the year of the permanent discontinuance of the trade, the interval shall be deemed to be part of the second basis period, and

(iii) where there is an interval between the end of the basis period for the year of assessment preceding that in which the trade is permanently discontinued and the basis period for the year in which the permanent discontinuance occurs, the interval shall be deemed to form part of the first basis period.

(3) (a) Any reference in subsection (2)(b) to the overlapping of 2 periods shall be construed as including a reference to the coincidence of 2 periods or to the inclusion of one period in another, and references to the period common to both of 2 periods shall be construed accordingly.

(b) Any reference in subsection (2)(b) to the permanent discontinuance of a trade shall be construed as including a reference to the occurring of any event which under the Income Tax Acts is to be treated as equivalent to the permanent discontinuance of a trade.

(4) Where an allowance or charge is to be made under Chapter 2 of this Part to or on a person carrying on or holding a profession, employment or office, subsections (1) to (3) shall apply as if the references to a trade included references to a profession, employment or office and as if the references to Case I of Schedule D included references to Case II of Schedule D and Schedule E.

(5) In the case of any other person to whom an allowance or on whom a charge is to be made under this Part, that other person's basis period for any year of assessment shall be the year of assessment itself.

307 Corporation tax: allowances and charges in taxing a trade. [CTA76 s14(1) and (2)]

307.—(1) In computing for the purposes of corporation tax a company's profits for any accounting period, there shall be made in accordance with this section and section 308 all such deductions and additions as are required to give effect to the provisions of the Tax Acts which relate to allowances (including investment allowances) and charges in respect of capital expenditure, and subsection (2) and section 308 shall apply as respects allowances and charges which are to be made under those provisions as they apply for the purposes of corporation tax.

(2) (a) Allowances and charges to be made for any accounting period in taxing a trade shall be given effect by treating the amount of any allowance as a trading expense of the trade in that period and by treating the amount on which any such charge is to be made as a trading receipt of the trade in that period.

(b) (i) A company to which an industrial building allowance under section 271, an initial allowance under section 283 or an initial allowance under section 303(1)(a) is to be made in taxing a trade for any accounting period may disclaim the allowance by notice in writing given to the inspector not later than 2 years after the end of that period.

(ii) Any such notice shall be accompanied by a certificate signed by the person by whom the notice is given giving such particulars as show that the allowance would be made if no such notice were given and the amount which would be so made.

(iii) Where notice is given under subparagraph (i) for any accounting period, the inspector may make an assessment to corporation tax on the company for that accounting period on the amount or the further amount which in the inspector's opinion ought to be charged.

308 Corporation tax: manner of granting, and effect of, allowances made by means of discharge or repayment of tax. [CTA76 s14(3) to (8)]

308.—(1) Where an allowance is to be made to a company for any accounting period which is to be given by discharge or repayment of tax or in charging its income under Case V of Schedule D, and is to be available primarily against a specified class of income, it shall, as far as may be, be given effect by deducting the amount of the allowance from any income of the period, being income of the specified class.

(2) Balancing charges for any accounting period which are not to be made in taxing a trade shall, notwithstanding any provision for them to be made under Case IV or V of Schedule D, as the case may be, be given effect by treating the amount on which the charge is to be made as income of the same class as that against which the corresponding allowances are available or primarily available.

(3) Where an allowance which is to be made for any accounting period by means of discharge or repayment of tax, or in charging income under Case V of Schedule D, as the case may be, cannot be given full effect under subsection (1) in that period by reason of a want or deficiency of income of the relevant class, then, so long as the company remains within the charge to corporation tax, the amount unallowed shall be carried forward to the succeeding accounting period, except in so far as effect is given to it under subsection (4), and the amount so carried forward shall be treated for the purposes of this section, including any further application of this subsection, as the amount of a corresponding allowance for that period.

(4) Where an allowance (other than an allowance carried forward from an earlier accounting period) which is to be made for any accounting period by means of discharge or repayment of tax, or in charging income under Case V of Schedule D, as the case may be, and which is available primarily against income of a specified class cannot be given full effect under subsection (1) in that period by reason of a want or deficiency of income of that class, the company may claim that effect shall be given to the allowance against the profits (of whatever description) of that accounting period and, if the company was then within the charge to corporation tax, of preceding accounting periods ending within the time specified in subsection (5), and, subject to that subsection and to any relief for earlier allowances or for losses, the profits of any of those accounting periods shall then be treated as reduced by the amount unallowed under subsection (1), or by so much of that amount as cannot be given effect under this subsection against profits of a later accounting period.

(5) The time referred to in subsection (4) is a time immediately preceding the accounting period first mentioned in subsection (4) equal in length to the accounting period for which the allowance is to be made; but the amount or aggregate amount of the reduction which may be made under that subsection in the profits of an accounting period falling partly before that time shall not, with the amount of any reduction to be made in those profits under any corresponding provision of the Corporation Tax Acts relating to losses, exceed a part of those profits proportionate to the part of the period falling within that time.

(6) A claim under subsection (4) shall be made by notice in writing given to the inspector not later that 2 years from the end of the accounting period in which an allowance cannot be given full effect under subsection (1).

309 Companies not resident in the State. [CTA76 s21(4)]

309.—Where a company not resident in the State is within the charge to corporation tax in respect of one source of income and to income tax in respect of another source, then, in applying—

(a) this Part,

(b) section 374,

(c) sections 658 and 660,

(d) sections 670 and 672 to 678,

(e) sections 764 and 765,

(f) section 769, and

(g) any other provision of the Tax Acts relating to the making of allowances or charges under or in accordance with the provisions referred to in paragraphs (a) to (f),

allowances relating to any source of income shall be given effect against income chargeable to the same tax as is chargeable on income from that source.

310 Allowances in respect of certain contributions to capital expenditure of local authorities. [FA78 s26]

310.—(1) In this section—

“approved scheme” means a scheme undertaken by a local authority with the approval of the Minister for the Environment and Local Government which has as its object or among its objects the treatment of trade effluents;

“trade effluents” means liquid or other matter discharged into public sewers from premises occupied for the purposes of a trade.

(2) Where a person, for the purposes of a trade carried on or to be carried on by the person, contributes a capital sum to expenditure by a local authority on the provision of an asset to be used for the purposes of an approved scheme, in so far as the scheme relates to the treatment of trade effluents, then, such allowances, if any, shall be made to the person under section 271, 272, 283 or 284 as would have been made to the person if the contribution had been expenditure on the provision for the purposes of that trade of a similar asset and that asset had continued at all material times to be in use for the purposes of the trade.

(3) The following provisions shall apply in relation to a transfer of a trade or part of a trade for the purposes of which a contribution referred to in subsection (2) was made:

(a) where the transfer is of the whole trade, allowances which, if the transfer had not taken place, would have been made to the transferor under section 272 or 284 for chargeable periods ending after the date of the transfer shall be made to the transferee and shall not be made to the transferor;

(b) where the transfer is of part only of the trade, paragraph (a) shall apply in relation to so much of the allowance as is properly referable to the part of the trade transferred.

311 Apportionment of consideration and exchanges and surrenders of leasehold interests. [ITA67 s298; FA96 s132(1) and Sch5 PtI par1(14)]

311.—(1) (a) Any reference in this Part to the sale of any property includes a reference to the sale of that property together with any other property and, where property is sold together with other property, so much of the net proceeds of the sale of the whole property as on a just apportionment is properly attributable to the first-mentioned property shall for the purposes of this Part be deemed to be the net proceeds of the sale of the first-mentioned property, and references to expenditure incurred on the provision or the purchase of property shall be construed accordingly.

(b) For the purposes of this subsection, all the property which is sold in pursuance of one bargain shall be deemed to be sold together, notwithstanding that separate prices are, or purport to be, agreed for separate items of that property or that there are, or purport to be, separate sales of separate items of that property.

(2) Subsection (1) shall, with the necessary modifications, apply in relation to other sale, insurance, salvage or compensation moneys as it applies in relation to the net proceeds of sales.

(3) This Part shall apply as if any reference in this Part to the sale of any property included a reference to the exchange of any property and, in the case of a leasehold interest, also included a reference to the surrender of that interest for valuable consideration, and any provisions of this Part referring to the sales shall apply accordingly with the necessary modifications and in particular with the modifications that references to the net proceeds of sale and to the price shall be taken to include references to the consideration for the exchange or surrender, and references to capital sums included in the price shall be taken to include references to so much of the consideration as would have been a capital sum if the consideration had taken the form of a money payment.

(4) This section shall, with the necessary modifications, apply in relation to Chapter 1 of Part 24 and sections 764 and 765 as if that Chapter and those sections were contained in this Part.

312 Special provisions as to certain sales. [ITA67 s299 other than subsection (4)(b)(iii); CTA76 s21(1) Sch1 par46; FA96 s132(1) and Sch5 PtI par1(15)]

312.—(1) In this section, “control”, in relation to a body corporate, means the power of a person to secure—

(a) by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate, or

(b) by virtue of any powers conferred by the articles of association or other document regulating that or any other body corporate,

that the affairs of the first-mentioned body corporate are conducted in accordance with the wishes of that person and, in relation to a partnership, means the right to a share of more than 50 per cent of the assets, or of more than 50 per cent of the income, of the partnership.

(2) (a) This section shall apply in relation to sales of any property where either—

(i) the buyer is a body of persons over whom the seller has control, or the seller is a body of persons over whom the buyer has control, or both the seller and the buyer are bodies of persons and some other person has control over both of them, or

(ii) it appears with respect to the sale, or with respect to transactions of which the sale is one, that the sole or main benefit which apart from this section might have been expected to accrue to the parties or any of them was the obtaining of an allowance under this Part or under Chapter 1 of Part 24 or section 764 or 765.

(b) References in this subsection to a body of persons include references to a partnership.

(3) Where the property is sold at a price other than the price it would have fetched if sold in the open market, then, subject to subsections (4) and (5), the like consequences shall ensue for the purposes of the enactments mentioned in subsection (2), in their application to the tax of all persons concerned, as would have ensued if the property had been sold for the price it would have fetched if sold in the open market.

(4) (a) Subject to paragraph (b), where the sale is a sale of machinery or plant—

(i) no initial allowance shall be made to the buyer, and

(ii) subject to subsection (5), if the price which the property would have fetched if sold in the open market is greater than the amount which, for the purpose of determining whether any, and if so, what, balancing charge should be made on the seller in respect of the property under Chapter 2 of this Part, would be taken to be the amount of the capital expenditure incurred by the seller on the provision of the property, subsection (3) shall apply as if for each of the references to the price which the property would have fetched if sold in the open market there were substituted a reference to that amount.

(b) This subsection shall not apply in relation to a sale of machinery or plant which was never used if the business or part of the business of the seller was the manufacture or supply of machinery or plant of that class and the sale was effected in the ordinary course of the seller's business.

(5) (a) Subject to subsection (6), where the sale is one to which subsection (2)(a)(i) applies and subsection (2)(a)(ii) does not apply, and the parties to the sale by notice in writing to the inspector so elect, the following provisions shall apply:

(i) subsection (3) shall apply as if for each of the references to the price which the property would have fetched if sold in the open market there were substituted a reference to that price or to the sum mentioned in paragraph (b), whichever is the lower;

(ii) subsection (4)(a)(ii) shall not apply;

(iii) notwithstanding anything in the preceding provisions of this section, such balancing charge, if any, shall be made on the buyer on any event occurring after the date of the sale as would have been made on the seller if the seller had continued to own the property and had done all such things and been allowed all such allowances or deductions in connection with the property as were done by or allowed to the buyer.

(b) The sum referred to in paragraph (a)(i) is—

(i) in the case of an industrial building or structure, the residue of the expenditure on the construction of that building or structure immediately before the sale, computed in accordance with section 277, and

(ii) in the case of machinery or plant, the amount of the expenditure on the provision of the machinery or plant still unallowed immediately before the sale, computed in accordance with section 292.

(6) (a) An election under subsection (5)(a) may not be made if—

(i) any of the parties to the sale is not resident in the State at the time of the sale, and

(ii) the circumstances are not at that time such that an allowance or charge under this Part is to be or might be made to or on that party in consequence of the sale.

(b) Except where referred to in paragraph (a), this section shall apply in relation to a sale notwithstanding that it is not fully applicable by reason of the non-residence of a party to the sale or otherwise.

313 Effect, in certain cases, of succession to trade, etc. [ITA67 s300; FA96 s132(2) and Sch5 PtII]

313.—(1) Where a person succeeds to any trade or profession which until that time was carried on by another person and by virtue of section 69 the trade or profession is to be treated as discontinued, any property which, immediately before the succession takes place, was in use for the purposes of the discontinued trade or profession and without being sold is, immediately after the succession takes place, in use for the purposes of the new trade or profession shall for the purposes of this Part be treated as if it had been sold to the successor when the succession takes place and as if the net proceeds of that sale had been the price which that property would have fetched if sold in the open market.

(2) Where, after the setting up and before the permanent discontinuance of a trade or profession which at any time is carried on in partnership anything is done for the purposes of that trade or profession, any allowance or charge which, if the trade or profession had at all times been carried on by one and the same person, would have been made to or on that person under this Part shall, subject to section 1010, be made to or on the person or persons from time to time carrying on that trade or profession (in this subsection referred to as “the relevant person or persons”), and the amount of any such allowance or charge shall be computed as if the relevant person or persons had at all times been carrying on the trade or profession and as if everything done to or by the predecessors of the relevant person or persons in the carrying on of that trade or profession had been done to or by the relevant person or persons.

(3) In relation to machinery or plant, this section shall apply subject to Chapter 2 of this Part in so far as that Chapter relates to balancing allowances and balancing charges.

314 Procedure on apportionment. [ITA67 s301; CTA76 s21(1) and Sch1 par47]

314.—(1) Where under or by virtue of this Part any sum is to be apportioned and at the time of the apportionment it appears that it is material as respects the liability to tax (for whatever chargeable period) of 2 or more persons, any question which arises as to the manner in which the sum is to be apportioned shall be determined, for the purposes of the tax of all those persons, by the Appeal Commissioners in the like manner as if it were an appeal against an assessment to income tax under Schedule D, and the provisions of the Income Tax Acts relating to such an appeal shall apply accordingly with any necessary modifications, and all those persons shall be entitled to appear and be heard by the Appeal Commissioners or to make representations to them in writing.

(2) This section shall apply in relation to any determination for the purposes of this Part of the price which property would have fetched if sold in the open market as it applies in relation to apportionments.

315 Property used for purposes of “exempted trading operations”. [ITA67 s302; CTA76 s21(1) and Sch1 par48]

315.—(1) Where an event occurs which gives rise, or would but for this section give rise, to a balancing allowance or balancing charge in respect of any property to or on a company in relation to which a certificate under section 374(2) of the Income Tax Act, 1967, or section 70(2) of the Corporation Tax Act, 1976, has been given, then, whether the certificate is still in force or not, this section shall apply.

(2) Where the property has been used by the company exclusively for the purposes of its exempted trading operations within the meaning of Chapter I of Part XXV of the Income Tax Act, 1967, or Part V of the Corporation Tax Act, 1976, no balancing allowance or balancing charge shall be made.

(3) Where the property has been used partly for the purposes of the company's exempted trading operations and partly for the purposes of its other trading operations, regard shall be had to all the relevant circumstances of the case and there shall be made to or on the company an allowance of such an amount, or, as the case may be, a charge on such an amount, as may be just and reasonable.

316 Interpretation of certain references to expenditure and time when expenditure is incurred. [ITA67 s241(9A), s251(2), s254(4)(a), s260, s261, s303(1), (2); CTA76 s21(1) and Sch1 par15, par17, par21 and par49; FA96 s132(1) and Sch5 PtI par1(12)(b)]

316.—(1) References in this Part to capital expenditure and capital sums—

(a) in relation to the person incurring the expenditure or paying the sums, do not include any expenditure or sum allowed to be deducted in computing for the purposes of tax the profits or gains of a trade, profession, office or employment carried on or held by that person, and

(b) in relation to the person receiving the amounts expended or the sums in question, do not include references to any amounts or sums which are to be taken into account as receipts in computing the profits or gains of any trade, profession, office or employment carried on or held by that person,

and do not include, in relation to any person referred to in paragraphs (a) and (b), any expenditure or sum in the case of which a deduction of tax is to be or may be made under section 237 or 238.

(2) Any reference in this Part to the date on which expenditure is incurred shall be construed as a reference to the date when the sums in question become payable; but, for the purposes of section 284, this subsection shall apply only in respect of machinery and plant provided for use for the purposes of a trade on or after the 6th day of April 1996.

(3) For the purposes of sections 271 and 283, any expenditure incurred for the purposes of a trade by a person about to carry on the trade shall be treated as if it had been incurred by that person on the first day on which that person carries on the trade.

317 Treatment of grants. [ITA67 s254(4)(b), s303(3), FA86 s52(1), FA87 s25; CTA76 s 21(1) and Sch1 par1, par17 and par49; FA93 s34(1)(a) and (b) and (3)]

317.—(1) In this section—

“food processing trade” means a trade which consists of or includes the manufacture of processed food;

“processed food” means goods manufactured in the State in the course of a trade by a company, being goods which—

(a) are intended for human consumption as a food, and

(b) have been manufactured by a process involving the use of machinery or plant whereby the goods produced by the application of that process differ substantially in form and value from the materials to which the process has been applied and whereby, without prejudice to the generality of the foregoing, the process does not consist primarily of—

(i) the acceleration, retardation, alteration or application of a natural process, or

(ii) the application of methods of preservation, pasteurisation or any similar treatment;

“qualifying machinery or plant” means machinery or plant used solely in the course of a process of manufacture whereby processed food is produced.

(2) Subject to subsection (3), expenditure shall not be regarded for any of the purposes of this Part, other than sections 283 and 284, as having been incurred by a person in so far as the expenditure has been or is to be met directly or indirectly—

(a) in relation to expenditure incurred before the 6th day of May, 1993, by the State, by any board established by statute or by any public or local authority, and

(b) in relation to expenditure incurred on or after the 6th day of May, 1993, by the State or by any person other than the first-mentioned person.

(3) (a) Subject to paragraph (b) and subsection (4), where an allowance is to be made for the purposes of income tax or corporation tax, as the case may be, under section 283 or 284 and the capital expenditure incurred on the provision of the machinery or plant in respect of which the allowance is to be made was incurred on or after the 29th day of January, 1986, the following provisions shall apply:

(i) expenditure shall not be regarded as having been incurred by a person in so far as the expenditure has been or is to be met directly or indirectly—

(I) in relation to expenditure incurred before the 6th day of May, 1993, by the State, by any board established by statute or by any public or local authority, and

(II) in relation to expenditure incurred on or after the 6th day of May, 1993, by the State or by any person other than the first-mentioned person, and

(ii) the actual cost of any machinery or plant to any person shall for the purposes of section 284 be taken to be the amount of capital expenditure incurred on the provision of such machinery or plant less any expenditure referred to in subparagraph (i).

(b) Paragraph (a) shall not apply in relation to any capital expenditure which is met or is to be met in the manner mentioned in paragraph (a)(i)—

(i) under the terms of an agreement finally approved on or before the 29th day of January, 1986, by a Department of State, any board established by statute or any public or local authority, or

(ii) under the terms of an agreement which—

(I) was the subject of negotiations which were in progress on the 29th day of January, 1986, with a Department of State, any board established by statute or any public or local authority, and

(II) was finally approved by such Department, board or authority not later than the 31st day of December, 1986.

(4) (a) Subsection (3) shall not apply where an allowance is to be made under section 283 or 284 in taxing a food processing trade carried on by a company and the capital expenditure in respect of which the allowance is to be made was incurred by that company and was so incurred in respect of qualifying machinery or plant.

(b) The reference in paragraph (a) to expenditure incurred by a company shall not include any expenditure which it is deemed to have incurred in accordance with section 299.

318 Meaning of “sale, insurance, salvage or compensation moneys”. [ITA67 s304(1); CTA76 s21(1) and Sch1 par50; FA94 s24(c)]

318.—In this Part, except where the context otherwise requires, “sale, insurance, salvage or compensation moneys”, in relation to an event which gives rise or might give rise to a balancing allowance or a balancing charge to or on any person, means—

(a) where the event is a sale of any property, including the sale of a right to use or otherwise deal in machinery or plant consisting of computer software, the net proceeds to that person of the sale,

(b) where the event is the demolition or destruction of any property, the net amount received by that person for the remains of the property, together with any insurance moneys received by that person in respect of the demolition or destruction and any other compensation of any description received by that person in respect of the demolition or destruction, in so far as that compensation consists of capital sums,

(c) as respects machinery or plant, where the event is the permanent loss of the machinery or plant otherwise than in consequence of its demolition or destruction, any insurance moneys received by that person in respect of any loss and any other compensation of any description received by that person in respect of that loss, in so far as that compensation consists of capital sums, and

(d) where the event is that a building or structure ceases altogether to be used, any compensation of any description received by that person in respect of that event, in so far as that compensation consists of capital sums.

319 Adjustment of allowances by reference to value-added tax. [FA75 s29; FA97 s20(14)]

319.—(1) In computing any deduction, allowance or relief for the purposes of—

(a) this Part,

(b) sections 658 and 659,

(c) Chapter 1 of Part 24, or

(d) sections 764, 765 and 769,

the cost to a person of any machinery or plant, or the amount of any expenditure incurred by a person, shall not take account of any amount included in such cost or expenditure for value-added tax in respect of which the person may claim—

(i) a deduction under section 12 of the Value-Added Tax Act, 1972, or

(ii) a refund of value-added tax under an order under section 20(3) of that Act.

(2) In calculating for the purposes of this Part the amount of sale, insurance, salvage or compensation moneys to be taken into account in computing a balancing allowance or balancing charge to be made to or on a person, no account shall be taken of the amount of value-added tax (if any) chargeable to the person in respect of those moneys.

320 Other interpretation (Part 9). [ITA67 s254(1)(c), s255(6) and s304(1) to (6); CTA76 s21(1) and Sch1 par17 and par50; FA97 s146(1) and Sch9 PtI par1(20)]

320.—(1) In this Part, except where the context otherwise requires—

“income” includes any amount on which a charge to tax is authorised to be made under this Part;

“lease” includes an agreement for a lease where the term to be covered by the lease has begun, and any tenancy, but does not include a mortgage, and “lessee”, “lessor” and “leasehold interest” shall be construed accordingly.

(2) Any reference in this Part to any building, structure, machinery or plant shall be construed as including a reference to a part of any building, structure, machinery or plant except, in relation to a building or structure, where the reference is comprised in a reference to the whole of a building or structure.

(3) This Part shall apply in relation to a share in machinery or plant as it applies in relation to a part of machinery or plant and, for the purposes of this Part, a share in machinery or plant shall be deemed to be used for the purposes of a trade only so long as the machinery or plant is used for the purposes of the trade.

(4) Any reference in this Part to the time of any sale shall be construed as a reference to the time of completion or the time when possession is given, whichever is the earlier.

(5) Any reference in this Part to the setting up or permanent discontinuance of a trade includes, except where the contrary is expressly provided, a reference to the occurring of any event which under any provision of the Income Tax Acts is to be treated as equivalent to the setting up or permanent discontinuance of a trade.

(6) Any reference in this Part to an allowance made includes a reference to an allowance which would be made but for an insufficiency of profits or gains, or other income, against which to make the allowance.

321 Provisions of general application in relation to the making of allowances and charges. [CTA76 Sch1 par1, 2, 3; FA97 s20(4)]

321.—(1) Subsections (2) to (7) shall apply for the interpretation of—

(a) this Part,

(b) section 374,

(c) sections 658 to 660,

(d) Chapter 1 of Part 24,

(e) sections 764 and 765,

(f) section 769, and

(g) any other provision of the Tax Acts relating to the making of allowances or charges under or in accordance with the provisions referred to in paragraphs (a) to (f).

(2) “Chargeable period” means an accounting period of a company or a year of assessment, and—

(a) a reference to a chargeable period or its basis period is a reference to the chargeable period if it is an accounting period and to the basis period for it if it is a year of assessment;

(b) a reference to a chargeable period related to expenditure, or a sale or other event, is a reference to the chargeable period in which, or to that in the basis period for which, the expenditure is incurred or the sale or other event takes place, and means the latter only if the chargeable period is a year of assessment.

(3) References to tax for a chargeable period shall be construed in relation to corporation tax as referring to the tax for any financial year which is chargeable in respect of that period.

(4) A reference to allowances or charges being made in taxing a trade is a reference to their being made in computing the trading income for corporation tax or in charging the profits or gains of the trade to income tax.

(5) (a) Where it is provided that writing-down allowances shall be made in respect of any expenditure during a writing-down period of a specified length, there shall for any chargeable period wholly or partly comprised in the writing-down period be made an allowance equal to the appropriate fraction of the expenditure and, subject to any provision to the contrary, the appropriate fraction shall be such fraction of the writing-down period as falls within the chargeable period.

(b) Notwithstanding paragraph (a), the aggregate amount of the writing-down allowances made, whether to the same or to different persons, together with the amount of any initial allowance (but not of any investment allowance), shall not exceed the amount of the expenditure.

(6) Where the reference is partly to years of assessment before the year 1976-77—

(a) a writing-down allowance includes an annual allowance, and

(b) an allowance on account of wear and tear of machinery or plant includes a deduction on account of wear and tear of machinery or plant,

in the sense which in the context those expressions had immediately before the commencement of the Corporation Tax Act, 1976.

(7) Where any enactment referred to in subsection (1) provides for an amount of a writing-down allowance or an allowance on account of wear and tear of machinery or plant to be determined by a fraction or percentage, specified numerically, of any expenditure or other sum, or by reference to a percentage determined or deemed to be determined for a chargeable period of one year, then for a chargeable period of less than a year the fraction or percentage shall be proportionately reduced.

(8) Except where the context otherwise requires, in any provision of the Income Tax Acts not referred to in subsection (1) any reference to an allowance or charge for a year of assessment under a provision referred to in that subsection shall include the like allowance or charge for an accounting period of a company, and any reference to the making of an allowance or charge in charging profits or gains of a trade shall be construed as a reference to making the allowance in taxing a trade.

(9) Any provision of the Income Tax Acts whereby, for the purposes of—

(a) this Part,

(b) section 670,

(c) section 764 or 765,

(d) section 769, or

(e) any provision of the Income Tax Acts relating to the making of allowances or charges under or in accordance with the provisions referred to in paragraphs (a) to (d),

a trade is or is not to be treated as permanently discontinued or a new trade as set up and commenced shall apply in the like manner in the case of a trade so treated by virtue of the Corporation Tax Acts.

PART 10 Income Tax and Corporation Tax: Reliefs for Renewal and Improvement of Certain Urban Areas, Certain Resort Areas and Certain Islands

CHAPTER 1 Custom House Docks Area

322 Interpretation (Chapter 1). [FA86 s41; FA87 s27(1)(b) and (2); FA94 s36(c) and (d); FA95 s32(1)(a) and s33]

322.—(1) In this Chapter, but subject to subsection (2)—

“the Custom House Docks Area” means the area described in paragraph 2 of Schedule 5;

“the specified period” means the period commencing on the 25th day of January, 1988, and ending on the 24th day of January, 1999.

(2) For the purposes of this Chapter, the Minister for Finance, after consultation with the Minister for the Environment and Local Government, may by order direct that—

(a) the definition of “the Custom House Docks Area” shall include such area or areas described in the order which but for the order would not be included in that definition, and

(b) as respects any such area so described, the definition of “the specified period” shall be construed as a reference to such period as shall be specified in the order in relation to that area; but no such period specified in the order shall commence before the 26th day of January, 1994, or end after the 24th day of January, 1999,

and, where the Minister for Finance so orders, the definition of “the Custom House Docks Area” shall be deemed to include that area or those areas and the definition of “the specified period” shall be construed as a reference to the period specified in the order.

(3) The Minister for Finance may make orders for the purpose of this section and any order made under this section shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the order is passed by Dáil Éireann within the next 21 days on which Dáil Éireann has sat after the order is laid before it, the order shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.

(4) Schedule 5 shall apply for the purposes of supplementing this Chapter.

323 Capital allowances in relation to construction of certain commercial premises. [FA86 s42(1), (2), proviso to (4), and (7); FA92 s29(b)(ii); FA93 s30(1)(a)(ii); FA95 s32(1)(b)]

323.—(1) In this section, “qualifying premises” means a building or structure the site of which is wholly within the Custom House Docks Area and which—

(a) apart from this section is not an industrial building or structure within the meaning of section 268(1), and

(b) (i) is in use for the purposes of a trade or profession, or

(ii) whether or not it is so used, is let on bona fide commercial terms for such consideration as might be expected to be paid in a letting of the building or structure negotiated on an arm's length basis,

but does not include any building or structure in use as or as part of a dwelling house.

(2) (a) Subject to subsections (3) to (5), the provisions of the Tax Acts relating to the making of allowances or charges in respect of capital expenditure incurred on the construction of an industrial building or structure shall, notwithstanding anything to the contrary in those provisions, apply—

(i) as if a qualifying premises were, at all times at which it is a qualifying premises, a building or structure in respect of which an allowance is to be made for the purposes of income tax or corporation tax, as the case may be, under Chapter 1 of Part 9 by reason of its use for a purpose specified in section 268(1)(a), and

(ii) where any activity carried on in the qualifying premises is not a trade, as if it were a trade.

(b) An allowance shall be given by virtue of this subsection in respect of any capital expenditure incurred on the construction of a qualifying premises only in so far as that expenditure is incurred in the specified period.

(3) (a) For the purposes of the application, by subsection (2), of sections 271 and 273 in relation to capital expenditure incurred in the specified period on the construction of a qualifying premises—

(i) section 271 shall apply as if—

(I) in subsection (1) of that section the definition of “industrial development agency” were deleted,

(II) in subsection (2)(a)(i) of that section “to which subsection (3) applies” were deleted,

(III) subsections (3) and (5) of that section were deleted, and

(IV) the following subsection were substituted for subsection (4) of that section:

“(4) An industrial building allowance shall be of an amount equal to 50 per cent of the capital expenditure mentioned in subsection (2).”,

and

(ii) section 273 shall apply as if—

(I) in subsection (1) of that section the definition of “industrial development agency” were deleted, and

(II) subsections (2)(b) and (3) to (7) of that section were deleted.

(b) Notwithstanding paragraph (a), as respects any capital expenditure incurred on or after the 25th day of January, 1998, on the construction of any qualifying premises—

(i) any allowance made under section 272 and increased under section 273(2)(a) in respect of that expenditure, whether claimed for one chargeable period or more than one such period, shall not in the aggregate exceed 54 per cent of the amount of that expenditure, and

(ii) where any allowance made under section 272 in respect of that expenditure is increased under section 273 for any chargeable period, no allowance shall be made in respect of that expenditure under section 271.

(4) Notwithstanding section 274(1), no balancing charge shall be made in relation to a qualifying premises by reason of any of the events specified in that section which occurs—

(a) more than 13 years after the qualifying premises was first used, or

(b) in a case where section 276 applies, more than 13 years after the capital expenditure on refurbishment of the qualifying premises was incurred.

(5) For the purposes only of determining, in relation to a claim for an allowance by virtue of subsection (2), whether and to what extent capital expenditure incurred on the construction of a qualifying premises is incurred in the specified period, only such an amount of that capital expenditure as is determined by the inspector, according to the best of the inspector's knowledge and judgment, to be properly attributable to work on the construction of the premises actually carried out during the specified period shall (notwithstanding any other provision of the Tax Acts as to the time when any capital expenditure is or is to be treated as incurred) be treated as having been incurred in that period, and any amount which by virtue of this subsection is determined by the inspector may be amended by the Appeal Commissioners or by the Circuit Court on the hearing or the rehearing of an appeal against that determination.

324 Double rent allowance in respect of rent paid for certain business premises. [FA86 s45(1)(a) and (c) and (2) (apart from paragraph (a) of 1st proviso, and 2nd proviso thereto); FA90 s32 and s33(1) and (2)(a); FA91 s21; FA92 s29(d)(ii); FA93 s30(1)(c) and (2)(b); FA94 s35(1)(d) and (2)(c); FA96 s131; FA97 s27]

324.—(1) (a) In this section—

“lease”, “lessee”, “lessor” and “rent” have the same meanings respectively as in Chapter 8 of Part 4;

“market value”, in relation to a building or structure, means the price which the unencumbered fee simple of the building or structure would fetch if sold in the open market in such manner and subject to such conditions as might reasonably be calculated to obtain for the vendor the best price for the building or structure, less the part of that price which would be attributable to the acquisition of, or of rights in or over, the land on which the building or structure is constructed;

“qualifying lease” means, subject to subsection (4), a lease in respect of a qualifying premises granted in the specified period, or within the period of 2 years from the day next after the end of the specified period, on bona fide commercial terms by a lessor to a lessee not connected with the lessor, or with any other person entitled to a rent in respect of the qualifying premises, whether under that lease or any other lease;

“qualifying premises” means a building or structure the site of which is wholly within the Custom House Docks Area and—

(i) (I) which is an industrial building or structure within the meaning of section 268(1), and in respect of which capital expenditure is incurred in the specified period for which an allowance is to be made for the purposes of income tax or corporation tax, as the case may be, under Chapter 1 of Part 9, or

(II) in respect of which an allowance is to be made, or, as respects rent payable under a qualifying lease entered into on or after the 18th day of April, 1991, will by virtue of section 279 be made, for the purposes of income tax or corporation tax, as the case may be, under Chapter 1 of Part 9 by virtue of section 323, and

(ii) which is let on bona fide commercial terms for such consideration as might be expected to be paid on a letting of the building or structure negotiated on an arm's length basis,

but, as respects rent payable under a qualifying lease entered into on or after the 6th day of May, 1993, where capital expenditure is incurred in the specified period on the refurbishment of a building or structure in respect of which an allowance is to be made for the purposes of income tax or corporation tax, as the case may be, under Chapter 1 of Part 9, the building or structure shall not be regarded as a qualifying premises unless the total amount of the expenditure so incurred is not less than an amount equal to 10 per cent of the market value of the building or structure immediately before that expenditure is incurred;

“refurbishment”, in relation to a building or structure, means any work of construction, reconstruction, repair or renewal, including the provision or improvement of water, sewerage or heating facilities, carried out in the course of repair or restoration, or maintenance in the nature of repair or restoration, of the building or structure.

(b) For the purposes of this section but subject to paragraph (c), so much of a period, being a period when rent is payable by a person in relation to a qualifying premises under a qualifying lease, shall be a relevant rental period as does not exceed—

(i) 10 years, or

(ii) the period by which 10 years exceeds—

(I) any preceding period, or

(II) if there is more than one preceding period, the aggregate of those periods,

for which rent was payable—

(A) by that person or any other person, or

(B) as respects rent payable in relation to any qualifying premises under a qualifying lease entered into before the 11th day of April, 1994, by that person or any person connected with that person,

in relation to that premises under a qualifying lease.

(c) As respects rent payable in relation to any qualifying premises under a qualifying lease entered into before the 18th day of April, 1991, “relevant rental period”, in relation to a qualifying premises, means the period of 10 years commencing on the day on which rent in respect of that premises is first payable under any qualifying lease.

(2) Subject to subsection (3), where in the computation of the amount of the profits or gains of a trade or profession a person is apart from this section entitled to any deduction (in this subsection referred to as “the first-mentioned deduction”) on account of rent in respect of a qualifying premises occupied by such person for the purposes of that trade or profession which is payable by such person—

(a) for a relevant rental period, or

(b) as respects rent payable in relation to any qualifying premises under a qualifying lease entered into before the 18th day of April, 1991, in the relevant rental period,

in relation to that qualifying premises under a qualifying lease, such person shall be entitled in that computation to a further deduction (in this subsection referred to as “the second-mentioned deduction”) equal to the amount of the first-mentioned deduction but, as respects a qualifying lease granted on or after the 21st day of April, 1997, where the first-mentioned deduction is on account of rent payable by such person to a connected person, such person shall not be entitled in that computation to the second-mentioned deduction.

(3) Where a person holds an interest in a qualifying premises out of which interest a qualifying lease is created directly or indirectly in respect of the qualifying premises and in respect of rent payable under the qualifying lease a claim for a further deduction under this section is made, and such person or, as respects rent payable in relation to any qualifying premises under a qualifying lease entered into on or after the 6th day of May, 1993, either such person or another person connected with such person—

(a) takes under a qualifying lease a qualifying premises (in this subsection referred to as “the second-mentioned premises”) occupied by such person or such other person, as the case may be, for the purposes of a trade or profession, and

(b) is apart from this section entitled, in the computation of the amount of the profits or gains of that trade or profession, to a deduction on account of rent in respect of the second-mentioned premises,

then, unless such person or such other person, as the case may be, shows that the taking on lease of the second-mentioned premises was not undertaken for the sole or main benefit of obtaining a further deduction on account of rent under this section, such person or such other person, as the case may be, shall not be entitled in the computation of the amount of the profits or gains of that trade or profession to any further deduction on account of rent in respect of the second-mentioned premises.

(4) (a) In this subsection—

“current value”, in relation to minimum lease payments, means the value of those payments discounted to their present value at a rate which, when applied at the inception of the lease to—

(i) those payments, including any initial payment but excluding any payment or part of any payment for which the lessor will be accountable to the lessee, and

(ii) any unguaranteed residual value of the qualifying premises, excluding any part of such value for which the lessor will be accountable to the lessee,

produces discounted present values the aggregate amount of which equals the amount of the fair value of the qualifying premises;

“fair value”, in relation to a qualifying premises, means an amount equal to such consideration as might be expected to be paid for the premises on a sale negotiated on an arm's length basis less any grants receivable towards the purchase of the qualifying premises;

“inception of the lease” means the earlier of the time the qualifying premises is brought into use or the date from which rentals under the lease first accrue;

“minimum lease payments” means the minimum payments over the remaining part of the term of the lease to be paid to the lessor, and includes any residual amount to be paid to the lessor at the end of the term of the lease and guaranteed by the lessee or by a person connected with the lessee;

“unguaranteed residual value”, in relation to a qualifying premises, means that part of the residual value of that premises at the end of a term of a lease, as estimated at the inception of the lease, the realisation of which by the lessor is not assured or is guaranteed solely by a person connected with the lessor.

(b) A finance lease, that is—

(i) a lease in respect of a qualifying premises where, at the inception of the lease, the aggregate of the current value of the minimum lease payments (including any initial payment but excluding any payment or part of any payment for which the lessor will be accountable to the lessee) payable by the lessee in relation to the lease amounts to 90 per cent or more of the fair value of the qualifying premises, or

(ii) a lease which in all the circumstances is considered to provide in substance for the lessee the risks and benefits associated with ownership of the qualifying premises other than legal title to that premises,

shall not be a qualifying lease for the purposes of this section.

325 Rented residential accommodation: deduction for certain expenditure on construction. [FA81 s23(1)(a), (2), (3)(a), (5), (6) and (7); FA91 s56(1)(a)(i) and (b) and (2); FA94 s37(1)(b)(ii); FA95 s34(1)(c)(ii) and (2)]

325.—(1) In this section—

“qualifying lease”, in relation to a house, means, subject to section 329(2), a lease of the house the consideration for the grant of which consists—

(a) solely of periodic payments all of which are or are to be treated as rent for the purposes of Chapter 8 of Part 4, or

(b) of payments of the kind mentioned in paragraph (a), together with a payment by means of a premium which does not exceed 10 per cent of the relevant cost of the house;

“qualifying period” means the period commencing on the 30th day of January, 1991, and ending on the last day of the specified period;

“qualifying premises” means, subject to subsections (3), (4)(a) and (5) of section 329, a house in the Custom House Docks Area—

(a) which is used solely as a dwelling,

(b) the total floor area of which—

(i) is not less than 30 square metres and not more than—

(I) 125 square metres, or

(II) as respects expenditure incurred before the 12th day of April, 1995, 90 square metres,

in the case where the house is a separate self-contained flat or maisonette in a building of 2 or more storeys, or

(ii) in any other case, is not less than 35 square metres and not more than 125 square metres,

(c) in respect of which, if it is not a new house (for the purposes of section 4 of the Housing (Miscellaneous Provisions) Act, 1979) provided for sale, there is in force a certificate of reasonable cost, the amount specified in which in respect of the cost of construction of the house is not less than the expenditure actually incurred on such construction, and

(d) which without having been used is first let in its entirety under a qualifying lease and thereafter throughout the remainder of the relevant period (except for reasonable periods of temporary disuse between the ending of one qualifying lease and the commencement of another such lease) continues to be let under such a lease;

“relevant cost”, in relation to a house, means, subject to subsection (3), an amount equal to the aggregate of—