165D Allowance where decommissioning undertaken for other participators in oil field
(1) This section applies where—
(a) S decommissions the plant or machinery,
(b) there are, in addition to R, one or more other participators in the relevant field, and
(c) the expenditure incurred in respect of the decommissioning is apportioned between the participators (including R) in accordance with their shares in the oil won from the relevant field or their shares in the equity of that field.
(2) D is the part of the expenditure referred to in subsection (1)(c) which is incurred by R.
(3) Where—
(a) plant or machinery is or has been used in connection with the winning of oil from more than one relevant field, and
(b) the expenditure incurred in respect of the decommissioning is apportioned between those fields in accordance with the contribution from each field to the total of the oil won using that plant or machinery,
subsections (1) and (2) apply to each such field as if subsection (1)(c) referred to the expenditure apportioned to that field.
(4) But subsections (2) and (3) do not apply (and section 165B(2) applies instead) if—
(a) the amount of consideration, or the method of determining the amount of consideration, to be received by S under the arrangement or arrangements, or
(b) the apportionment of the liability for that consideration (whether between the participators as mentioned in subsection (1)(c) or between the fields as mentioned in subsection (3)(b)),
has been agreed as, or as part of, an avoidance scheme.
(5) A scheme is an “avoidance scheme” if the main purpose, or one of the main purposes, of a party in entering into the scheme is to enable a person to obtain a tax advantage under this Part that would not otherwise be obtained.
(6) The reference in subsection (5) to obtaining a tax advantage that would not otherwise be obtained includes obtaining an allowance that is in any way more favourable to a person than the one that would otherwise be obtained.
(7) In this section—
“licensee”, “oil” and “oil field” have the same meaning as in Part 1 of OTA 1975,
“other participator” means a person, not connected with R, who is a licensee in respect of any licensed area wholly or partly included in the oil field in question, and
“relevant field” means an oil field—
in which plant or machinery is located, or
in connection with which the plant or machinery is being or has been used for the purposes of a ring fence trade.
(1) Allowances under this Part are restricted under subsection (5) if—
(a) a person (“R”) who is carrying on, or has ceased to carry on, a ring fence trade enters into a transaction with another person (“S”),
(b) S receives from R consideration for services provided in pursuance of the transaction,
(c) all or part of that consideration is decommissioning expenditure, and
(d) the transaction either has an avoidance purpose, or is part of, or occurs as a result of, a scheme or arrangement that has an avoidance purpose.
(2) Subsection (1)(d) may be satisfied—
(a) whether the scheme or arrangement was made before or after the transaction was entered into, and
(b) whether or not the scheme or arrangement is legally enforceable.
(3) A transaction, scheme or arrangement has an “avoidance purpose” if the main purpose, or one of the main purposes, of a party in—
(a) entering into the transaction, scheme or arrangement, or
(b) agreeing an amount of consideration, or a method of determining an amount of consideration, to be paid in pursuance of the transaction, scheme or arrangement,
is to enable a person to obtain a tax advantage under this Part that would not otherwise be obtained.
(4) The reference in subsection (3) to obtaining a tax advantage that would not otherwise be obtained includes obtaining an allowance that is in any way more favourable to a person than the one that would otherwise be obtained.
(5) All or part of R's expenditure under the transaction is to be left out of account in determining R's available qualifying expenditure.
(6) The amount of expenditure to be left out of account is—
(a) such amount as would or would in effect cancel out the tax advantage mentioned in subsection (3) (whether that advantage is obtained by R or another person and whether it relates to the transaction or something else), or
(b) if the amount found under paragraph (a) exceeds the whole of R's expenditure under the transaction, the whole of that expenditure.
166 Transfers of interests in oil fields: anti-avoidance
(1) This section applies if—
(a) there is, for the purposes of Schedule 17 to FA 1980, a transfer by a participator in an oil field of the whole or part of his interest in the field, and
(b) as part of the transfer, the old participator disposes of, and the new participator acquires—
(i) plant or machinery used, or expected to be used, in connection with the field, or
(ii) a share in such plant or machinery.
(2) The amount, if any, by which the new participator’s expenditure exceeds the old participator’s disposal value is to be left out of account in determining the new participator’s available qualifying expenditure.
(3) In subsection (2)—
(a) “the new participator’s expenditure” means the expenditure incurred by the new participator on the acquisition of the plant or machinery, and
(b) “the old participator’s disposal value” means the disposal value to be brought into account by the old participator as a result of the disposal of the plant or machinery to the new participator.
(4) In this section—
(a) “oil field” and “participator” have the same meaning as in Part I of OTA 1975,
(b) “the old participator” means the participator whose interest in the oil field is wholly or partly transferred, and
(c) “the new participator” means the person to whom the interest in the oil field is transferred.
(5) Nothing in this section affects the operation of Chapter 17 (anti-avoidance).
(1) Sections 168 to 170 apply if—
(a) a person (“the contractor”) is entitled to an interest in a contract made with, or with the authorised representative of, the government of a country or territory in which oil is or may be produced, and
(b) the contract provides (among other things) for any plant or machinery of a description specified in the contract which—
(i) is provided by the contractor, and
(ii) has an oil-related use under the contract,
to be transferred (immediately or later) to the government or representative.
(2) For the purposes of this section and sections 168 to 170, plant or machinery has an oil-related use if it is used—
(a) to explore for, win access to or extract oil,
(b) for the initial storage or treatment of oil, or
(c) for other purposes ancillary to the extraction of oil.
(3) In this section and sections 168 to 170 “oil” has the meaning given by section 556(3).
168 Expenditure on plant or machinery incurred by contractor
(1) This section applies if—
(a) the contractor incurs capital expenditure on the provision of plant or machinery of a description specified in the contract,
(b) the plant or machinery is to have an oil-related use under the contract, for the purposes of a trade of oil extraction carried on by the contractor,
(c) the amount of the expenditure is commensurate with the value of the contractor’s interest under the contract, and
(d) the plant or machinery is transferred to the government or representative in accordance with the contract.
(2) Despite the transfer, the plant or machinery is to be treated for the purposes of this Part as owned by the contractor (and not by any other person) until—
(a) it ceases to be owned by the government or representative, or
(b) it ceases to be used, or held for use, by any person under the contract.
This is subject to section 170(2).
169 Expenditure on plant or machinery incurred by participator
(1) This section applies if—
(a) a person (“the participator”) acquires an interest in the contract from—
(i) the contractor, or
(ii) another person who has acquired it (directly or indirectly) from the contractor,
(b) the participator incurs capital expenditure on the provision of plant or machinery,
(c) the plant or machinery is to have an oil-related use under the contract, for the purposes of a trade of oil extraction carried on by the participator,
(d) the amount of the expenditure is commensurate with the value of the participator’s interest under the contract, and
(e) the plant or machinery is transferred to the government or representative in accordance with the contract.
(2) Despite the transfer, the plant or machinery is to be treated for the purposes of this Part as owned by the participator (and not by any other person) until—
(a) it ceases to be owned by the government or representative, or
(b) it ceases to be used, or held for use, by any person under the contract.
This is subject to section 170(2).
170 Participator’s expenditure attributable to plant or machinery
(1) This section applies if—
(a) a person (“the relevant participator”) acquires an interest in the contract from—
(i) the contractor, or
(ii) another person who has acquired it (directly or indirectly) from the contractor, and
(b) some of the expenditure incurred by the relevant participator to acquire the interest in the contract is attributable to plant or machinery which—
(i) is treated by section 168 as owned by the contractor, or
(ii) is treated by section 169 or subsection (2) as owned by another person (“the other participator”).
(2) The plant or machinery is to be treated for the purposes of this Part as owned by the relevant participator (and not by any other person) until—
(a) it ceases to be owned by the government or representative, or
(b) it ceases to be used, or held for use, by any person under the contract.
This is subject to a later application of this subsection.
(3) The person who, until subsection (2) applies, is treated as owning the plant or machinery is to be treated for the purposes of this Part as if he had disposed of it for a consideration equal to the relevant participator’s expenditure attributable to it.
(4) The relevant participator is to be treated for the purposes of this Part as if—
(a) he had incurred capital expenditure of an amount given by subsection (5), and
(b) he owned the plant or machinery (in accordance with subsection (2)) as a result of having incurred that expenditure.
(5) The amount of that expenditure is—
(a) the amount of the relevant participator’s expenditure attributable to the plant or machinery, or
(b) if less, the disposal value to be brought into account by the contractor or the other participator as a result of subsection (3).
(6) The expenditure attributable to plant or machinery for the purposes of this section is to be determined having regard to what is just and reasonable in the circumstances.
(1) This section applies if a person treated as owning plant or machinery under section 168(2), 169(2) or 170(2) ceases to be treated as owning it solely as a result of one of those provisions.
(2) If the person receives capital compensation, the disposal value to be brought into account is the amount of the compensation.
(3) If the person does not receive capital compensation, the disposal value to be brought into account is nil.
(1) This Chapter applies to determine entitlement to allowances under this Part in respect of expenditure on plant or machinery that is, or becomes, a fixture.
(2) For the purposes of this Part, ownership of plant or machinery that is, or becomes, a fixture is determined under this Chapter.
(2A) Subsections (1) and (2) are subject to section 172A.
(3) The provisions of this Chapter that treat a person as being the owner of a fixture (see sections 176 to 184 and 193 to 195B) are subject to the provisions of this Chapter which treat a person as ceasing to be the owner of a fixture (see sections 188 to 192A).
(4) References in this Chapter to a person being treated—
(a) as the owner of plant or machinery, or
(b) as ceasing to be the owner of plant or machinery,
are to be read as references to the person being so treated for the purposes of this Part.
(5) This Chapter does not affect any entitlement a person has to an allowance as a result of section 538 (contribution allowances for plant and machinery).
172A Long funding leases etc: cases where this Chapter does not apply.
(1) This section applies where plant or machinery that is or becomes a fixture is the subject of a long funding lease (see Chapter 6A).
(2) This section also applies if, in any such case,—
(a) the lessee under the long funding lease is or becomes the lessor of some or all of the plant or machinery under a further lease, and
(b) the further lease is not itself a long funding lease within subsection (1).
(3) This Chapter does not apply to determine the entitlement of the lessor or the lessee (under either lease) to allowances under this Part in respect of expenditure on the plant or machinery.
(4) This Chapter does not apply to determine whether the lessor or the lessee (under either lease) is to be treated as the owner of the plant or machinery.
(1) In this Chapter “fixture”—
(a) means plant or machinery that is so installed or otherwise fixed in or to a building or other description of land as to become, in law, part of that building or other land, and
(b) includes any boiler or water-filled radiator installed in a building as part of a space or water heating system.
(2) In this Chapter “relevant land”, in relation to a fixture means—
(a) the building or other description of land of which the fixture becomes part, or
(b) in the case of a boiler or water-filled radiator which is a fixture as a result of subsection (1)(b), the building in which it is installed as part of a space or water heating system.
(1) In this Chapter “equipment lease” means—
(a) an agreement entered into in the circumstances given in subsection (2), or
(b) a lease entered into under or as a result of such an agreement.
(2) The circumstances are that—
(a) a person incurs capital expenditure on the provision of plant or machinery for leasing,
(b) an agreement is entered into for the lease, directly or indirectly from that person, of the plant or machinery to another person,
(c) the plant or machinery becomes a fixture, and
(d) the agreement is not an agreement for the plant or machinery to be leased as part of the relevant land.
(3) In this Chapter—
“equipment lessor” means the person from whom (directly or indirectly) the equipment lease provides for the plant or machinery to be leased, and
“equipment lessee” means the person to whom the equipment lease provides for the plant or machinery to be leased.
(4) Except in the context of leasing plant or machinery, any reference in this Chapter to a lease is to—
(a) any leasehold estate in or, in Scotland, lease of, the land (whether in the nature of a head-lease, sub-lease or under-lease), or
(b) any agreement to acquire such an estate or, in Scotland, lease;
and, in relation to such an agreement, “grant” is to be read accordingly.
(1) In this Chapter “interest in land” means—
(a) the fee simple estate in the land or an agreement to acquire such an estate,
(b) in relation to Scotland, the interest of the owner or an agreement to acquire such an interest,
(c) a lease,
(d) an easement or servitude or an agreement to acquire an easement or servitude, and
(e) a licence to occupy land.
(2) If an interest in land is—
(a) conveyed or assigned by way of security, and
(b) subject to a right of redemption,
the person with the right of redemption is treated for the purposes of this Chapter as having that interest, and not the creditor.
(1) In this Chapter “ energy services agreement ” means an agreement entered into by an energy services provider (“ the energy services provider ”) and another person (“ the client ”) that makes provision, with a view to saving energy or using energy more efficiently, for—
(a) the design of plant or machinery, or one or more systems incorporating plant or machinery,
(b) obtaining and installing the plant or machinery,
(c) the operation of the plant or machinery,
(d) the maintenance of the plant or machinery, and
(e) the amount of any payments in respect of the operation of the plant or machinery to be linked (wholly or in part) to energy savings or increases in energy efficiency resulting from the provision or operation of the plant or machinery.
(2) In this Chapter “ energy services provider ” means a person carrying on a qualifying activity consisting wholly or mainly in the provision of energy management services.
176 Person with interest in relevant land having fixture for purposes of qualifying activity
(1) If—
(a) a person incurs capital expenditure on the provision of plant or machinery for the purposes of a qualifying activity carried on by him,
(b) the plant or machinery becomes a fixture, and
(c) that person has an interest in the relevant land at the time the plant or machinery becomes a fixture,
that person is to be treated, on and after that time, as the owner of the fixture as a result of incurring the expenditure.
(2) If there are two or more persons with different interests in the relevant land who would be treated as the owner of the same fixture as a result of subsection (1), one interest only is taken into account under that subsection.
(3) The interest to be taken into account is given by the following rules—
Rule 1
If one of the interests is an easement or servitude or any agreement to acquire an easement or servitude, that interest is the interest to be taken into account.
Rule 2
If Rule 1 does not apply, but one of the interests is a licence to occupy land, that interest is the interest to be taken into account.
Rule 3
In any other case—
(a) except in Scotland, the interest to be taken into account is the interest which is not in reversion (at law or in equity and whether directly or indirectly) on any other interest in the relevant land which is held by any of the persons referred to in subsection (2), and
(b) in Scotland, the interest to be taken into account is the interest of whichever of the persons referred to in subsection (2) has, or last had, the right of use of the relevant land.
(4) Subsection (1) is subject to sections 177(4) and 180A(4) .
(1) If—
(a) the conditions in—
(i) section 178 (equipment lessee has qualifying activity etc.),
(ii) section 179 (equipment lessor has right to sever fixture that is not part of building), or
(iii) section 180 (equipment lease is part of affordable warmth programme),
are met in relation to an equipment lease,
(b) the equipment lessor and the equipment lessee are not connected persons, and
(c) they elect that this section should apply,
the equipment lessor is to be treated, on and after the relevant time, as the owner of the fixture as a result of incurring the capital expenditure on the provision of the plant or machinery that is the subject of the equipment lease.
(2) The relevant time for the purposes of subsection (1) is (unless subsection (3) applies) the time when the equipment lessor incurs the expenditure.
(3) If—
(a) the conditions in section 178 are met in relation to an equipment lease (but the conditions in sections 179 and 180 are not), and
(b) the equipment lessor incurs the capital expenditure before the equipment lessee begins to carry on the qualifying activity,
the relevant time is the time when the equipment lessee begins to carry on the qualifying activity.
(4) If an election is made under this section, the equipment lessee is not to be treated under section 176 as the owner of the fixture.
(5) An election under this section must be made by notice to the an officer of Revenue and Customs—
(a) for income tax purposes, on or before the normal time limit for amending a tax return for the tax year in which the relevant chargeable period ends;
(b) for corporation tax purposes, no later than 2 years after the end of the relevant chargeable period.
(6) “The relevant chargeable period” means the chargeable period in which the capital expenditure was incurred.
The conditions referred to in section 177(1)(a)(i) are that—
(a) the equipment lease is for the lease of the plant or machinery for the purposes of a qualifying activity which is, or is to be, carried on by the equipment lessee,
(b) if the equipment lessee had incurred the capital expenditure incurred by the equipment lessor on the provision of the plant or machinery that is the subject of the equipment lease, he would, as a result of section 176, have been entitled to an allowance in respect of it, and
(c) the equipment lease is not for the lease of the plant or machinery for use in a dwelling-house.
179 Equipment lessor has right to sever fixture that is not part of building
(1) The conditions referred to in section 177(1)(a)(ii) are that—
(a) the plant or machinery becomes a fixture by being fixed to land that is neither a building nor part of a building,
(b) the equipment lessee has an interest in the land when taking possession of the plant or machinery under the equipment lease,
(c) under the terms of the equipment lease, the equipment lessor is entitled to sever the plant or machinery, at the end of the period for which it is leased, from the land to which it is fixed at that time,
(d) under the terms of the equipment lease, the equipment lessor will own the plant or machinery on its severance in accordance with the equipment lease,
(e) the nature of the plant or machinery and the way in which it is fixed to land are such that its use on one set of premises does not, to any material extent, prevent it from being used, once severed, for the same purposes on a different set of premises,
(f) the equipment lease is one which under generally accepted accounting practice falls (or would fall) to be treated in the accounts of the equipment lessor as an operating lease, and
(g) the equipment lease is not for the lease of the plant or machinery for use in a dwelling-house.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
180 Equipment lease is part of affordable warmth programme
(1) The conditions referred to in section 177(1)(a)(iii) are that—
(a) the plant or machinery which is the subject of the equipment lease consists of a boiler, heat exchanger, radiator or heating control that is installed in a building as part of a space or water heating system,
(b) the expenditure of the equipment lessor is incurred before 1st January 2008, and
(c) the equipment lease is approved for the purposes of this section as entered into as part of the affordable warmth programme.
(2) The approval mentioned in subsection (1)(c) may be given, with the consent of the Treasury—
(a) by the Secretary of State;
(b) in the case of buildings in Scotland, by the Scottish Ministers;
(c) in the case of buildings in Wales, by the National Assembly for Wales;
(d) in the case of buildings in Northern Ireland, by the Department for Social Development in Northern Ireland.
(3) If an approval is withdrawn, it is to be treated for the purposes of subsection (1)(c) as never having had effect.
(1) If—
(a) an energy services agreement is entered into,
(b) the energy services provider incurs capital expenditure under the agreement on the provision of plant or machinery,
(c) the plant or machinery becomes a fixture,
(d) at the time the plant or machinery becomes a fixture—
(i) the client has an interest in the relevant land, and
(ii) the energy services provider does not,
(e) the plant or machinery—
(i) is not provided for leasing, and
(ii) is not provided for use in a dwelling-house,
(f) the operation of the plant or machinery is carried out wholly or substantially by the energy services provider or a person connected with him,
(g) the energy services provider and the client are not connected persons, and
(h) they elect that this section should apply,
the energy services provider is to be treated, on and after the time at which he incurs the expenditure, as the owner of the fixture as a result of incurring the expenditure.
(2) But if the client would not have been entitled to a section 176 allowance in respect of the expenditure if he had incurred it, subsection (1) does not apply unless the plant or machinery belongs to a class of plant or machinery specified by Treasury order.
(3) In subsection (2) a “ section 176 allowance ” means an allowance to which a person is entitled as a result of section 176.
(4) If an election is made under this section, the client is not to be treated under section 176 as the owner of the fixture.
(5) An election under this section must be made by notice to an officer of Revenue and Customs—
(a) for income tax purposes, on or before the normal time limit for amending a tax return for the tax year in which the relevant chargeable period ends;
(b) for corporation tax purposes, no later than 2 years after the end of the relevant chargeable period.
(6) The “ relevant chargeable period ” means the chargeable period in which the capital expenditure was incurred.
181 Purchaser of land giving consideration for fixture
(1) If—
(a) after any plant or machinery has become a fixture, a person (“the purchaser”) acquires an interest in the relevant land,
(b) that interest was in existence before the purchaser’s acquisition of it, and
(c) the consideration which the purchaser gives for the interest is or includes a capital sum that, in whole or in part, falls to be treated for the purposes of this Part as expenditure on the provision of the fixture,
the purchaser is to be treated, on and after the time of the acquisition, as the owner of the fixture as a result of incurring that expenditure.
(2) Subsection (1) does not apply, and is to be treated as never having applied, if, immediately after the time of the acquisition, a person has a prior right in relation to the fixture.
(3) For the purposes of subsection (2), a person has a prior right in relation to the fixture if he—
(a) is treated as the owner of the fixture immediately before the time referred to in subsection (2) as a result of incurring expenditure on the provision of the fixture,
(b) is not so treated as a result of section 538 (contribution allowances for plant and machinery),
(c) is entitled to an allowance in respect of that expenditure, and
(d) makes or has made a claim in respect of that expenditure.
(4) Subsection (1) is subject to sections 182 and 182A .
182 Purchaser of land discharging obligations of equipment lessee
(1) If—
(a) after any plant or machinery has become a fixture, a person (“the purchaser”) acquires an interest in the relevant land,
(b) that interest was in existence before the purchaser’s acquisition of it,
(c) before that acquisition, the plant or machinery was let under an equipment lease, and
(d) in connection with that acquisition, the purchaser pays a capital sum to discharge the obligations of the equipment lessee under the equipment lease,
the purchaser is to be treated, on and after the time of the acquisition, as the owner of the fixture as a result of incurring expenditure, consisting of that capital sum, on the provision of the fixture.
(2) Subsection (1) does not apply, and is to be treated as never having applied, if, immediately after the time of the acquisition, a person has a prior right in relation to the fixture.
(3) Section 181(3)(test for whether person has a prior right) applies for the purposes of subsection (2).
182A Purchaser of land discharging obligations of client under energy services agreement
(1) If—
(a) after any plant or machinery has become a fixture, a person (“ the purchaser ”) acquires an interest in the relevant land,
(b) that interest was in existence before the purchaser’s acquisition of it,
(c) before that acquisition, the plant or machinery was provided under an energy services agreement, and
(d) in connection with that acquisition, the purchaser pays a capital sum to discharge the obligations of the client under the energy services agreement,
the purchaser is to be treated, on and after the time of the acquisition, as the owner of the fixture as a result of incurring expenditure, consisting of that capital sum, on the provision of the fixture.
(2) Subsection (1) does not apply, and is to be treated as never having applied, if, immediately after the time of the acquisition, a person has a prior right in relation to the fixture.
(3) Section 181(3) (test for whether person has a prior right) applies for the purposes of subsection (2).
183 Incoming lessee where lessor entitled to allowances
(1) If—
(a) after any plant or machinery has become a fixture, a person (“the lessor”) who has an interest in the relevant land grants a lease,
(b) the lessor is entitled to an allowance in respect of the fixture for the chargeable period in which the lease is granted or would be if he were within the charge to tax,
(c) the consideration which the lessee gives for the lease is or includes a capital sum that, in whole or in part, falls to be treated for the purposes of this Part as expenditure on the provision of the fixture,
(d) the lessor and the lessee are not connected persons, and
(e) the lessor and the lessee make an election under this section,
the lessee is to be treated, on and after the time when the lease is granted, as the owner of the fixture as a result of incurring that expenditure.
(2) An election under this section must be made by notice to an officer of Revenue and Customs within 2 years after the date on which the lease takes effect.
184 Incoming lessee where lessor not entitled to allowances
(1) If—
(a) after any plant or machinery has become a fixture, a person (“the lessor”) who has an interest in the relevant land grants a lease,
(b) the lessor is not within section 183(1)(b),
(c) before the lease is granted, the fixture has not been used for the purposes of a qualifying activity carried on by the lessor or any person connected with the lessor, and
(d) the consideration which the lessee gives for the lease is or includes a capital sum that, in whole or in part, falls to be treated for the purposes of this Part as expenditure on the provision of the fixture,
the lessee is to be treated, on and after the time when the lease is granted, as the owner of the fixture as a result of incurring that expenditure.
(2) Subsection (1) does not apply, and is to be treated as never having applied, if, immediately after the time when the lease is granted, a person has a prior right in relation to the fixture.
(3) Section 181(3)(test for whether person has a prior right) applies for the purposes of subsection (2).
185 Fixture on which a plant and machinery allowance has been claimed
(1) This section applies if—
(a) a person (“the current owner”) is treated as the owner of a fixture as a result of incurring capital expenditure (“new expenditure”) on its provision,
(b) the plant or machinery is treated as having been owned at a relevant earlier time by any person (“the past owner”) as a result of incurring other expenditure,
(c) the plant or machinery is within paragraph (b) otherwise than as a result of section 538 (contribution allowances for plant and machinery), and
(d) the past owner is or has been required to bring the disposal value of the plant or machinery into account (as a result of having made a claim in respect of that other expenditure).
(2) If the new expenditure exceeds the maximum allowable amount, the excess—
(a) is to be left out of account in determining the current owner’s qualifying expenditure, or
(b) if the new expenditure has already been taken into account for this purpose, is to be treated as expenditure that should never have been taken into account.
(3) The maximum allowable amount is—
D
+
I
where—
D is the disposal value of the plant or machinery which the past owner has been or is required to bring into account, and
I is any of the new expenditure that is treated under section 25 (building alterations in connection with installation) as expenditure on the provision of the plant or machinery.
(4) If more than one disposal event has occurred requiring the past owner to bring the disposal value of the plant or machinery into account, the maximum allowable amount is calculated by reference only to the most recent of those events.
(5) For the purposes of this section, the current owner and the past owner may be the same person.
(6) In subsection (1)(b) “relevant earlier time” means (subject to subsection (7)) any time before the earliest time when the current owner is treated as owning the plant or machinery as a result of incurring the new expenditure.
(7) If, before the earliest time when the current owner is treated as owning the plant or machinery as a result of incurring the new expenditure—
(a) any person has ceased to own the plant or machinery as a result of a sale,
(b) the sale was not a sale of the plant or machinery as a fixture, and
(c) the buyer and seller were not connected persons at the time of the sale,
the relevant earlier time does not include any time before the seller ceased to own the plant or machinery.
186 Fixture on which an industrial buildings allowance has been made
(1) This section applies if—
(a) a person (“the past owner”) has at any time claimed an allowance to which he was entitled under Part 3 (industrial buildings allowances) in respect of expenditure which was or included expenditure on the provision of plant or machinery,
(b) the past owner has transferred the interest which was the relevant interest for the purposes of Part 3, and
(c) the current owner of the plant or machinery makes a claim in respect of expenditure (“new expenditure”) incurred—
(i) on the provision of the plant or machinery, and
(ii) at a time when it is a fixture in the building.
(2) If the new expenditure exceeds the maximum allowable amount, the excess is to be left out of account in determining the current owner’s qualifying expenditure.
(3) If the total consideration for the transfer by the past owner exceeds R, the maximum allowable amount is—
F
T
xR
where—
F is the part of the consideration for the transfer by the past owner that is attributable to the fixture,
T is the total consideration for that transfer, and
R is the residue of qualifying expenditure which would have been attributable to the relevant interest immediately after that transfer, calculated on the assumption that the transfer was a sale of the relevant interest, had the time immediately after the transfer fallen immediately before the repeal of Part 3 by section 84 of FA 2008.
(3A) Where subsection (3) does not apply, the maximum allowable amount is the part of the consideration for the transfer by the past owner that is attributable to the fixture.
(4) For the purposes of this section the current owner of the plant or machinery is—
(a) the person to whom the past owner transferred the relevant interest, or
(b) any person who is subsequently treated as the owner of the plant or machinery.
(5) In this section “building” and “residue of qualifying expenditure” have the same meaning as for the purposes of Part 3 immediately before its repeal by section 84 of FA 2008.
186A Fixtures on which a business premises renovation allowance has been made
(1) This section applies if—
(a) a person (“the past owner”) has at any time claimed an allowance to which that person was entitled under Part 3A (business premises renovation allowances) in respect of qualifying expenditure under that Part incurred in respect of a qualifying building (“Part 3A expenditure”),
(b) there has been a balancing event within section 360N(1) as a result of which an asset representing the whole or part of the Part 3A expenditure (“the Part 3A asset”) ceased to be owned by the past owner,
(c) the Part 3A asset was or included plant or machinery, and
(d) the current owner makes a claim under this Part in respect of expenditure (“new expenditure”) incurred—
(i) on the provision of the plant or machinery, and
(ii) at a time when it is a fixture.
(2) If the new expenditure exceeds the maximum allowable amount, the excess is to be left out of account in determining the current owner's qualifying expenditure.
(3) If the proceeds from the balancing event mentioned in subsection (1)(b) exceed R, the maximum allowance amount is—
F T × R
where—
F is so much of the proceeds from the balancing event as are attributable to the fixture,
T is the total amount of the proceeds from the balancing event, and
R is the qualifying expenditure incurred by the past owner on the Part 3A asset less the net Part 3A allowances in respect of that asset.
(4) Where subsection (3) does not apply, the maximum allowable amount is so much of the proceeds from the balancing event as are attributable to the fixture.
(5) For the purposes of subsection (3) the “net Part 3A allowances” in respect of the Part 3A asset means—
(a) the total of any allowances made under Part 3A in respect of the past owner's qualifying expenditure, less
(b) the total of any balancing charges made under that Part in respect of that expenditure.
(6) For the purposes of this section, the current owner of the plant or machinery is—
(a) the person who acquired the Part 3A asset from the past owner, or
(b) any person who is subsequently treated as the owner of the plant or machinery.
187 Fixture on which a research and development allowance has been made
(1) This section applies if—
(a) a person has at any time claimed an allowance to which he is entitled under Part 6 (research and development allowances) in respect of qualifying expenditure under that Part (“Part 6 expenditure”),
(b) an asset representing the whole or part of the Part 6 expenditure (“the Part 6 asset”) has ceased to be owned by that person (“the past owner”),
(c) the Part 6 asset was or included plant or machinery, and
(d) the current owner makes a claim under this Part in respect of expenditure (“new expenditure”) incurred—
(i) on the provision of the plant or machinery, and
(ii) at a time when it is a fixture.
(2) If the new expenditure exceeds the maximum allowable amount, the excess is to be left out of account in determining the current owner’s qualifying expenditure.
(3) The maximum allowable amount is—
F
T
xA
where—
F is the part of the consideration for the disposal of the Part 6 asset by the past owner that is attributable to the fixture,
T is the total consideration for that disposal, and
A is an amount equal to whichever is the smaller of—
the disposal value of the Part 6 asset when the past owner ceased to own it, and
so much of the Part 6 expenditure as related to the provision of the Part 6 asset.
(4) For the purposes of this section the current owner of the plant or machinery is—
(a) the person who acquired the Part 6 asset from the past owner, or
(b) any person who is subsequently treated as the owner of the plant or machinery.
(1) This section applies if—
(a) a person (“the current owner”) is treated as the owner of a fixture as a result of incurring capital expenditure (“new expenditure”) on its provision for the purposes of a qualifying activity carried on by the current owner,
(b) the plant or machinery is treated as having been owned at a relevant earlier time by a person as a result of incurring other capital expenditure (“historic expenditure”) on its provision for the purposes of a qualifying activity carried on by that person,
(c) the plant or machinery is within paragraph (b) otherwise than as a result of section 538 (contribution allowances for plant and machinery), and
(d) a person mentioned in paragraph (b) was entitled to claim an allowance under this Part in respect of the historic expenditure.
(2) In this section—
“the past owner” means—
the person mentioned in paragraph (d) of subsection (1), or
if there is more than one amount of historic expenditure in respect of which a person was entitled to claim as mentioned in that paragraph, the person by whom expenditure was incurred most recently;
“relevant earlier time” has the meaning given by section 187B(4) and (5).
(3) In determining the current owner’s qualifying expenditure, the new expenditure is to be treated as nil if—
(a) the pooling requirement is not satisfied,
(b) the fixed value requirement applies but is not satisfied, or
(c) the disposal value statement requirement applies but is not satisfied,
in relation to the past owner.
(4) The pooling requirement is that—
(a) the historic expenditure has been allocated to a pool in a chargeable period beginning on or before the day on which the past owner ceases to be treated as the owner of the fixture, or
(b) a first-year allowance has been claimed in respect of that expenditure (or any part of it).
(5) The fixed value requirement applies if the past owner is or has been required (as a result of having made a claim in respect of the historic expenditure) to bring the disposal value of the plant or machinery into account in accordance with item 1, 5 or 9 of the Table in section 196.
(6) The fixed value requirement is that either—
(a) a relevant apportionment of the apportionable sum has been made, or
(b) the current owner has obtained the statements mentioned in subsection (8), or copies of them, (directly or indirectly) from the persons who made them and the case is one where the purchaser from the past owner or, as the case may be, lessee was not entitled to claim an allowance under this Part in respect of capital expenditure incurred on the fixture.
(7) For the purposes of subsection (6)(a) a relevant apportionment of the apportionable sum is made if—
(a) the tribunal determines the part of the apportionable sum that constitutes the disposal value, on an application made by one of the affected parties before the end of the relevant 2 year period, or
(b) an election is made, in respect of the apportionable sum, by the affected parties jointly—
(i) before the end of the relevant 2 year period, or
(ii) if an application is made as mentioned in paragraph (a) and not determined or withdrawn by the end of that period, before that application is determined or withdrawn.
(8) The statements referred to in subsection (6)(b) are—
(a) a written statement made by the purchaser from the past owner or, as the case may be, lessee, that the requirement of subsection (6)(a) has not been met and is no longer capable of being met, and
(b) a written statement made by the past owner of the amount of the disposal value that the past owner has in fact brought into account.
(9) In subsections (6) to (8)—
(a) in a case falling within item 1 or 9 of the Table in section 196—
“affected parties” means the past owner and the purchaser from the past owner;
“apportionable sum” means the sale price;
“election” means an election under section 198;
“relevant 2 year period” means the period of 2 years beginning with the date when the purchaser from the past owner acquires the qualifying interest;
(b) in a case falling within item 5 of that Table—
“affected parties” means the past owner and the lessee;
“apportionable sum” means the capital sum given by the lessee for the lease;
“election” means an election under section 199;
“relevant 2 year period” means the period of 2 years beginning with the date when the lessee is granted the lease.
(10) The disposal value statement requirement applies if the past owner is or has been required (as a result of having made a claim in respect of the historic expenditure) to bring the disposal value of the plant or machinery into account in accordance with item 2 or 3 of the Table in section 196 or in accordance with item 7 of the Table in section 61.
(11) The disposal value statement requirement is—
(a) that the past owner has, no later than 2 years after the date when the past owner ceased to own the plant or machinery, made a written statement of the amount of the disposal value that the past owner is or has been required to bring into account, and
(b) the current owner has obtained that statement or a copy of it (directly or indirectly) from the past owner.
(1) It is for the current owner to show—
(a) whether the fixed value requirement applies and, if so, is satisfied, and
(b) whether the disposal value statement requirement applies and, if so, is satisfied,
and, for this purpose, to provide an officer of Revenue and Customs, on request, with a copy of any tribunal decision, election or statement by reason of which a requirement mentioned in paragraph (a) or (b) is satisfied.
(2) Where—
(a) the fixed value requirement applies and is met by reason of section 187A(6)(b) being satisfied, or
(b) the disposal value requirement applies,
subsections (2) and (4) of section 200 apply in relation to the making of a statement within section 187A(8)(b) or (11)(a) and an amount specified in such a statement, as they apply in relation to an election and an amount specified in an election.
(3) For the purposes of section 187A, the current owner and the past owner may be the same person.
(4) In that section “relevant earlier time” means (subject to subsection (5)) any time which falls before the earliest time when the current owner is treated as owning the plant or machinery as a result of incurring the new expenditure.
(5) If, before the earliest time when the current owner is treated as owning the plant or machinery as a result of incurring the new expenditure—
(a) any person has ceased to own the plant or machinery as a result of a sale,
(b) the sale was not a sale of the plant or machinery as a fixture, and
(c) the buyer and seller were not connected persons at the time of the sale,
the relevant earlier time does not include any time before the seller ceased to own the plant or machinery.
(6) Nothing in section 187A(3) affects the disposal value (if any) which falls to be brought into account by the past owner (as a result of having made a claim in respect of the historic expenditure).
(7) Expressions used in this section have the same meaning as in section 187A.
188 Cessation of ownership when person ceases to have qualifying interest
(1) This section applies if a person is treated as the owner of a fixture under—
(a) section 176 (person with interest in land having fixture for purposes of qualifying activity),
(b) section 181 (purchaser of land giving consideration for fixture),
(c) section 182 (purchaser of land discharging obligations of equipment lessee),
(ca) section 182A (purchaser of land discharging obligations of client under energy services agreement),
(d) section 183 (incoming lessee where lessor entitled to allowances), or
(e) section 184 (incoming lessee where lessor not entitled to allowances).
(2) If the person ceases at any time to have the qualifying interest, he is to be treated as ceasing to be the owner of the fixture at that time.
(3) In this Chapter “the qualifying interest” means—
(a) if section 176, 181 , 182 or 182A applies, the interest in the relevant land referred to in that section, and
(b) if section 183 or 184 applies, the lease referred to in that section.
(4) This section is subject to section 189.
189 Identifying the qualifying interest in special cases
(1) If—
(a) a person’s qualifying interest is an agreement to acquire an interest in land, and
(b) that interest is subsequently transferred or granted to that person,
the interest transferred or granted is to be treated as the qualifying interest.
(2) If a person’s qualifying interest ceases to exist as a result of its being merged in another interest acquired by that person, that other interest is to be treated as the qualifying interest.
(3) If—
(a) the qualifying interest is a lease, and
(b) on its termination, a new lease of the relevant land (with or without other land) is granted to the lessee,
the new lease is to be treated as the qualifying interest.
(4) If—
(a) the qualifying interest is a licence, and
(b) on its termination, a new licence to occupy the relevant land (with or without other land) is granted to the licensee,
the new licence is to be treated as the qualifying interest.
(5) If—
(a) the qualifying interest is a lease, and
(b) with the consent of the lessor, the lessee remains in possession of the relevant land after the termination of the lease without a new lease being granted to him,
the qualifying interest is to be treated as continuing so long as the lessee remains in possession of the relevant land.
190 Cessation of ownership of lessor where section 183 applies
(1) This section applies if a lessee is treated under section 183 (incoming lessee where lessor entitled to allowances) as the owner of a fixture.
(2) The lessor is to be treated as ceasing to be the owner of the fixture when the lessee begins to be treated as the owner.
191 Cessation of ownership on severance of fixture
If—
(a) a person is treated as the owner of the fixture as a result of any provision of this Chapter,
(b) the fixture is permanently severed from the relevant land (so that it ceases to be a fixture), and
(c) once it is severed, it is not in fact owned by that person,
that person is to be treated as ceasing to be the owner of the fixture when it is severed.
(1) This section applies if an equipment lessor is treated under section 177 as the owner of a fixture.
(2) If—
(a) the equipment lessor at any time assigns his rights under the equipment lease, or
(b) the financial obligations of the equipment lessee under an equipment lease are at any time discharged (on the payment of a capital sum or otherwise),
the equipment lessor is to be treated as ceasing to be the owner of the fixture at that time (or, as the case may be, at the earliest of those times).
(3) The reference in subsection (2)(b) to the equipment lessee is, in a case where the financial obligations of the equipment lessee have become vested in another person (by assignment, operation of law or otherwise), a reference to the person in whom the obligations are vested when the capital sum is paid.
192A Cessation of ownership of energy services provider
(1) This section applies if an energy services provider is treated under section 180A as the owner of a fixture.
(2) If—
(a) the energy services provider at any time assigns his rights under the energy services agreement, or
(b) the financial obligations of the client in respect of the fixture under an energy services agreement are at any time discharged (on the payment of a capital sum or otherwise),
the energy services provider is to be treated as ceasing to be the owner of the fixture at that time (or, as the case may be, the earliest of those times).
(3) The reference in subsection (2)(b) to the client is, in a case where the financial obligations of the client have become vested in another person (by assignment, operation of law or otherwise), a reference to the person in whom the obligations are vested when the capital sum is paid.
193 Acquisition of ownership by lessor or licensor on termination of lease or licence
If, on the termination of a lease or licence, the outgoing lessee or licensee is treated under section 188 as ceasing to be the owner of a fixture, the lessor or licensor is to be treated, on and after the termination of the lease or licence, as the owner of the fixture.
194 Acquisition of ownership by assignee of equipment lessor
(1) If section 192(2)(a) applies (cessation of ownership of equipment lessor as a result of assignment), the assignee is to be treated, on and after the assignment—
(a) as having incurred expenditure, consisting of the consideration given by him for the assignment, on the provision of the fixture, and
(b) as being the owner of the fixture.
(2) For the purposes of section 192 (and subsection (1) and section 195) the assignee is to be treated as being an equipment lessor who owns the fixture under section 177.
(1) If section 192(2)(b) applies (discharge of obligations of equipment lessee) because the equipment lessee has paid a capital sum, the equipment lessee is to be treated—
(a) as having incurred expenditure, consisting of the capital sum, on the provision of the fixture, and
(b) as being, on and after the time of payment, the owner of the fixture.
(2) Section 192(3) (assignee of equipment lessee) applies in relation to subsection (1).