[F1356NRestriction on hire etc of relevant assets to be brought into accountU.K.
(1)This section applies if the contractor makes, or is to make, one or more payments under a lease of—
(a)a relevant asset, or
(b)part of a relevant asset.
(2)The total amount that may be brought into account in respect of the payments for the purposes of calculating the contractor's ring fence profits in an accounting period is limited to the hire cap.
(3)The “hire cap” is an amount equal to the relevant percentage of TC for the accounting period, subject to subsection (4).
(4)If payments in relation to which subsection (2) or section 285A(2) (restriction on hire for company carrying on a ring fence trade under Part 8) applies are also made, or to be made, by one or more other companies in respect of the relevant asset or part, the “hire cap” is to be such proportion of the amount mentioned in subsection (3) as is just and reasonable, having regard (in particular) to the amounts of the payments made, or to be made, by the contractor and each other company.
(5)Subject to subsection (7), the “relevant percentage” is—
where—
UROS is the number of days in the accounting period that the relevant asset is provided, operated or used in a relevant offshore service, and
TU is the number of days in the accounting period that the relevant asset is provided, operated or used (whether or not in a relevant offshore service).
(6)Accordingly, the relevant percentage is zero if the relevant asset is not provided, operated or used in the accounting period.
(7)If the accounting period is less than 12 months, the relevant percentage is to be proportionally reduced.
(8)TC is—
(9)Unless subsection (11) applies, OC is the sum of—
(a)any consideration given for the acquisition of the relevant asset or part when it was first acquired by an associated person, and
(b)any expenses incurred by an associated person in connection with that acquisition (other than the costs of financing the acquisition).
This is subject to subsections (12) and (13).
(10)Subsection (11) applies if the relevant asset or part—
(a)is leased by an associated person from a person who is not an associated person, and
(b)has never been owned by an associated person.
(11)OC is the sum of—
(a)the consideration that it is reasonable to suppose would have been given for the acquisition of the relevant asset or part, if it had been acquired by an associated person by way of a bargain at arm's length at the time it was first leased as mentioned in subsection (10)(a), and
(b)the expenses (other than the costs of financing the acquisition) that it is reasonable to suppose would have been incurred by an associated person in connection with such an acquisition.
This is subject to subsections (12) and (13).
(12)If the relevant asset or part was first acquired by an associated person, or (as the case may be) first leased as mentioned in subsection (10)(a), before the beginning of the accounting period, OC does not include any part of the consideration mentioned in subsection (9)(a) or (as the case may be) (11)(a) that it is reasonable to attribute to anything that no longer forms part of the relevant asset or part at the beginning of the accounting period.
(13)If the relevant asset or part was first acquired by an associated person, or (as the case may be) first leased as mentioned in subsection (10)(a), in the accounting period, OC for the accounting period is—
where—
D is the total number of days in the accounting period,
DBA is the number of days in the accounting period before the day on which the relevant asset or part was first acquired or first leased, and
OC is the amount given by subsection (9) or (as the case may be) (11).
(14)CE is capital expenditure on the relevant asset or part (other than capital expenditure in respect of its acquisition or the acquisition of a lease of it) incurred by an associated person—
(a)after it was first acquired by an associated person or (as the case may be) was first leased as mentioned in subsection (10)(a), and
(b)before the end of the accounting period.
This is subject to subsections (15) and (16).
(15)CE does not include any capital expenditure mentioned in subsection (14) that is—
(a)incurred before the beginning of the accounting period, and
(b)not reflected in the state or nature of the relevant asset or part at the beginning of the accounting period.
(16)If any capital expenditure mentioned in subsection (14) is incurred on a day in the accounting period, the amount of CE for the accounting period in respect of that capital expenditure is—
where—
D is the total number of days in the accounting period,
DBI is the number of days in the accounting period before the day on which that capital expenditure is incurred, and
CEA is the amount of that capital expenditure.]
Textual Amendments
F1Pt. 8ZA inserted (retrospective to 1.4.2014) by Finance Act 2014 (c. 26), Sch. 16 paras. 4, 6