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Finance Act 1963

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This is the original version (as it was originally enacted).

36Scientific research allowances

(1)In the case of expenditure incurred after the 5th November 1962, an allowance under section 336 of the Act of 1952 (allowances for capital expenditure on scientific research) shall be made by allowing in the first of the five years of assessment mentioned in that section a deduction equal to the whole of the expenditure instead of by allowing in that year a deduction equal to three-fifths of the expenditure and in each of the remaining four years a deduction equal to one-tenth of the expenditure, and accordingly, in relation to expenditure so incurred, that section shall have effect as if—

(a)in subsection (1), for the words from " a deduction " to the end, there were substituted the words

a deduction equal to the whole of the expenditure shall be allowed in charging the profits or gains of the trade for the relevant year of assessment as defined by the following subsections;

(b)in subsections (2) and (4), for the words " the five years shall be that and the next four years ", there were substituted the words

the relevant year of assessment shall be that year; and

(c)in subsection (3), for the words from " the five years " to the end, there were substituted the words

the relevant year of assessment shall be the year of assessment next following that in which the trade was set up and commenced.,

and section 16(6)(a) of the Finance Act 1954 (which provides for an investment allowance to be made only for the first year of assessment for which an allowance under the said section 336 falls to be made) shall not have effect.

(2)The said section 336, as amended by the foregoing subsection, shall have effect in relation to expenditure incurred after the 5th November 1962 as if the following subsection were inserted at the end:—

(5)If the expenditure is incurred during the year of assessment in which the trade is permanently discontinued, the relevant year of assessment shall be that year.

(3)In the case of an asset representing expenditure incurred after the 5th November 1962, Part )(I of the Act of 1952 shall apply as if, in section 337 thereof, subsection (1) (which restricts allowances where an asset ceases to be used for scientific research) were omitted and the following were substituted for subsection (2):—

(2)Where an asset representing scientific research expenditure of a capital nature incurred by the person carrying on a trade ceases to be used by that person for scientific research related to that trade and is then or thereafter sold by him—

(a)if the sale occurs in or after the year of assessment for which an allowance in respect of the expenditure is made under the last preceding section, then—

(i)the sum by which the aggregate of the proceeds of sale and the amount of the allowance exceeds the amount of the expenditure, or (if it is less than that sum) the amount of the allowance, shall be treated as a trading receipt of the trade accruing at the time of the sale or, if the sale occurs on or after the date on which the trade is permanently discontinued, accruing immediately before the discontinuance; or

(ii)if, by reason of the operation of section 21(4) of the Finance Act 1954 (which requires demolition costs to be treated as expenditure on an asset), the said aggregate is less than the amount of the expenditure, a deduction equal to the difference shall, unless the asset was used for other purposes after it ceased to be used for scientific research related to the trade, be allowed in charging the profits or gains of the trade for the year of assessment in which the sale occurs or, if the sale occurs on or after the date on which the trade is permanently discontinued, for the last year of assessment in which the trade is carried on before the discontinuance;

(b)if the sale occurs before the year of assessment for which an allowance in respect of the expenditure would fall to be made under the last preceding section, that allowance shall not be made, but if the proceeds of sale are less than the expenditure a deduction equal to the difference shall be allowed in charging the profits or gains of the trade for the year of assessment in which the sale occurs:

Provided that no amount shall be allowed or charged by virtue of this subsection in respect of any sale if the sale gives rise to a balancing allowance or balancing charge under Chapter I or II of Part )( of this Act.

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