Finance Act 2006

Meaning of “PM” in paragraph 16 U.K.

17 (1) For the purposes of this paragraph [F1 and paragraph 17A] references to plant or machinery, in the case of any company, do not include any plant or machinery— U.K.

[F2 (a) on the provision of which the company has not incurred qualifying expenditure for the purposes of Part 2 of CAA 2001,

(aa) of which the company is the lessor under a long funding lease, or]

(b) which is, as a result of section 67 of that Act (hire-purchase and similar contracts), treated for the purposes of that Part as owned by a person other than the company,

but, apart from that, include all other plant or machinery, whether or not subject to a lease.

[F3 (2) For the purposes of paragraph 16 “PM” is the aggregate of the amounts in sub-paragraph (2A), but subject to paragraph 17A.

(2A) The amounts are—

(a) the amounts (if any) which would be shown in respect of plant or machinery in the appropriate balance sheet of the relevant company drawn up as at the start of the relevant day, and

(b) the amounts (if any) which would be shown in the appropriate balance sheet of the relevant company drawn up as at the end of the relevant day in respect of relevant transferred plant or machinery.

(2B) For the purposes of sub-paragraph (2A)(b) plant or machinery is “relevant transferred plant or machinery” if an amount in respect of it would be shown in the appropriate balance sheet of an associated company drawn up as at the start of the relevant day.]

(3) For [F4 the purposes of this paragraph] the amounts shown in the appropriate balance sheet of any company in respect of any plant or machinery are—

(a) the amounts shown in that balance sheet as the net book value (or carrying amount) in respect of the plant or machinery, and

(b) the amounts shown in that balance sheet as the net investment in respect of finance leases of the plant or machinery.

(4) If—

(a) any of the plant or machinery is a fixture in any land, and

(b) the amount which falls (or would fall) to be shown in an appropriate balance sheet as the net book value (or carrying amount) of the land includes (or would include) an amount in respect of the fixture,

the amount of the net book value (or carrying amount) in respect of the fixture is determined on a just and reasonable basis.

(5) If—

(a) any of the plant or machinery is subject to a finance lease, and

(b) any land or asset which is not plant or machinery is subject to that lease,

the amount of the net investment in respect of the finance lease of that plant or machinery is determined on a just and reasonable basis.

(6) In this paragraph any reference to any amount shown in the appropriate balance sheet of a company is to the amount which, on the following assumptions, falls (or would fall) to be shown in a balance sheet of the company.

(7) The assumptions are—

(a) that the balance sheet is drawn up F5 ... in accordance with generally accepted accounting practice, and

(b) that, if the company [F6 acquired any plant or machinery in circumstances in which this paragraph applies], the plant or machinery had been acquired for an amount equal to its market value as at the relevant day.

[F7 (8) Paragraph (b) of sub-paragraph (7) above applies if—

(a) the relevant day falls on or after 22 March 2006,

(b) the plant or machinery was acquired directly or indirectly from a person who was connected with the company when the acquisition took place, and

(c) either the acquisition took place on or after 5 December 2005 or the person from whom the plant or machinery was so acquired was also connected with the company on that date.]

Textual Amendments

F1 Words in Sch. 10 para. 17(1) inserted (with effect in accordance with Sch. 31 para. 12 of the amending Act) by Finance Act 2009 (c. 10), Sch. 31 para. 5(2)(a)

F2 Sch. 10 para. 17(1)(a) (aa) substituted for Sch. 10 para. 17(1)(a) (with effect in accordance with Sch. 31 para. 12 of the amending Act) by Finance Act 2009 (c. 10), Sch. 31 para. 5(2)(b)

F3 Sch. 10 para. 17(2)-(2B) substituted for Sch. 10 para. 17(2) (with effect in accordance with Sch. 31 para. 12 of the amending Act) by Finance Act 2009 (c. 10), Sch. 31 para. 5(3)

F4 Words in Sch. 10 para. 17(3) substituted (with effect in accordance with Sch. 31 para. 12 of the amending Act) by Finance Act 2009 (c. 10), Sch. 31 para. 5(4)

F5 Words in Sch. 10 para. 17(7)(a) omitted (with effect in accordance with Sch. 31 para. 12 of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 31 para. 5(5)

F6 Words in Sch. 10 para. 17(7)(b) substituted (with effect in accordance with Sch. 10 para. 9(2) of the amending Act) by Finance Act 2009 (c. 10), Sch. 10 para. 4(2)

F7 Sch. 10 para. 17(8) substituted (with effect in accordance with Sch. 10 para. 9(2) of the amending Act) by Finance Act 2009 (c. 10), Sch. 10 para. 4(3)

[F8 17A (1) Where this paragraph applies in relation to any plant or machinery— U.K.

(a) any amount included in the aggregate mentioned in paragraph 17(2) in respect of the plant or machinery is to be deducted from that aggregate, and

(b) the market value of the plant or machinery as at the relevant day is to be added to that aggregate (or, if that aggregate is nil, is to constitute PM).

(2) This paragraph applies in relation to plant or machinery if condition A or B is met.

(3) Condition A is that—

(a) the plant or machinery falls within sub-paragraph (4) at the start of the relevant day, or

(b) the plant or machinery falls within that sub-paragraph at the end of the relevant day, having been acquired by the relevant company from an associated company on that day.

(4) Plant or machinery falls within this sub-paragraph if the relevant company—

(a) is the lessee of the plant or machinery under a long funding finance lease, or

(b) is treated as the owner of the plant or machinery under section 67 of CAA 2001 (hire purchase and similar contracts).

(5) Condition B is that—

(a) the relevant company is the lessee of the plant or machinery under a long funding operating lease at the start of the relevant day, or

(b) the relevant company is the lessee of the plant or machinery under such a lease at the end of the relevant day and the plant or machinery was acquired by the relevant company from an associated company on that day.]

Textual Amendments

F8 Sch. 10 para. 17A inserted (with effect in accordance with Sch. 31 para. 12 of the amending Act) by Finance Act 2009 (c. 10), Sch. 31 para. 6