Capital Allowances Act 1990

106 Pre-trading expenditure on machinery or plant which is sold etc

(1) This section applies where—

(a) capital expenditure is incurred by any person on the provision of machinery or plant; and

(b) that expenditure falls within section 105(1)(a); and

(c) that expenditure is so incurred before he begins to carry on a trade of mineral extraction; and

(d) before he begins to carry on that trade, the machinery or plant is sold, demolished, destroyed or abandoned.

(2) Where this section applies and there is such an excess of expenditure as is referred to in subsection (3) below, then, for the purposes of this Part, the person concerned shall be treated as incurring qualifying expenditure equal to that excess on the first day on which he begins to carry on a trade of mineral extraction; and that qualifying expenditure is in this Part referred to as pre-trading expenditure on machinery or plant.

(3) Subject to subsection (4) below, the excess referred to in subsection (2) above is the amount by which the capital expenditure referred to in subsection (1) above exceeds any sale, insurance, salvage or compensation moneys resulting from the event mentioned in subsection (1)(d) above.

(4) If, in a case where this section applies, the mineral exploration and access at the source in connection with which the machinery or plant was used ceased before the first day referred to in subsection (2) above, any capital expenditure which was incurred more than six years before that day shall be left out of account in determining the amount of any excess under subsection (3) above.