The following section shall be inserted after section 152A of the M1Capital Allowances Act 1990—
(1)References in this section to company A, company B and the transfer shall be construed in accordance with section 269A of the Income and Corporation Taxes Act 1970 or, as the case may be, section 140A of the Taxation of Chargeable Gains Act 1992.
(2)This section applies where—
(a)section 269A of the Income and Corporation Taxes Act 1970 or section 140A of the Taxation of Chargeable Gains Act 1992 applies, and
(b)if immediately after the time of the transfer company B is not resident in the United Kingdom, the condition in subsection (3) below is met.
(3)The condition is that immediately after the time of the transfer company B carries on in the United Kingdom through a branch or agency a trade which consists of or includes the trade, or the part of the trade, transferred by the transfer.
(4)Where this section applies the first and second rules set out in subsections (5) and (6) below shall have effect.
(5)The first rule is that the transfer itself shall not be treated as giving rise to any allowances or charges under the Capital Allowances Acts.
(6)The second rule applies with regard to anything done after the transfer in relation to the assets included in it; and the rule is that everything done to or by company A in relation to those assets before the transfer shall for the purposes of the Capital Allowances Acts be treated as having been done to or by company B (and not company A).
(7)Where for the purposes of subsection (6) above expenditure falls to be apportioned between assets included in the transfer and other assets, the apportionment shall be made in such manner as is just and reasonable.
(8)Any question which arises as to the manner in which an apportionment referred to in subsection (7) above is to be made shall be determined, for the purposes of the tax of both company A and company B—
(a)in a case where the same body of General Commissioners have jurisdiction with respect to both the companies, by those Commissioners, unless the companies agree that it shall be determined by the Special Commissioners;
(b)in a case where different bodies of General Commissioners have jurisdiction with respect to the companies, by such of those bodies as the Board may direct, unless the companies agree that it shall be determined by the Special Commissioners;
(c)in any other case, by the Special Commissioners.
(9)The Commissioners by whom the question referred to in subsection (8) above falls to be determined shall make the determination in like manner as if it were an appeal except that company A and company B shall be entitled to appear and be heard by those Commissioners or to make representations to them in writing.
(10)In any case where this section applies, none of the following provisions shall apply—
(a)section 77;
(b)section 152A;
(c)section 157;
(d)section 158;
(e)section 343(2) of the principal Act.”
(1)In Part II of the M2Capital Allowances Act 1990 (machinery and plant) after section 67 there shall be inserted the following section—
(1)If a person carrying on a trade incurs capital expenditure in acquiring for the purposes of the trade a right to use or otherwise deal with computer software, then, for the purposes of this Part—
(a)the right and the software to which it relates shall be treated as machinery or plant;
(b)that machinery or plant shall be treated as provided for the purposes of the trade; and
(c)so long as he is entitled to the right, that machinery or plant shall be treated as belonging to him.
(2)In any case where—
(a)a person carrying on a trade incurs capital expenditure on the provision of computer software for the purposes of the trade, and
(b)in consequence of his incurring that expenditure, the computer software belongs to him, but
(c)the computer software does not constitute machinery or plant,
then for the purposes of this Part the computer software shall be treated as machinery or plant.”
(2)In section 24 of that Act (writing-down allowances and balancing adjustments) in subsection (6) (disposal value) for the words “subsection (7)" there shall be substituted “ subsections (6A) and (7) ”.
(3)After that subsection there shall be inserted the following subsection—
“(6A)In the case of machinery or plant consisting of computer software or the right to use or otherwise deal with computer software, the disposal value to be brought into account by a person for any chargeable period by virtue of subsection (6) above shall also include the disposal value of all such machinery or plant—
(a)on the provision of which for the purposes of the trade he has incurred capital expenditure;
(b)which belongs to him at some time in the chargeable period or its basis period;
(c)in respect of which, in the chargeable period or its basis period, the following event occurs, namely, he grants to another person a right to use or otherwise deal with the whole or part of the computer software concerned in circumstances where the consideration in money for the grant constitutes (or if there were consideration in money for the grant would constitute) a capital sum; and
(d)in respect of which, whilst the machinery or plant belongs or belonged to him, no event falling within paragraph (iv) or (v) of subsection (6)(c) above has occurred before the event referred to in paragraph (c) above.”
(4)In subsection (8) of that section for the words “subsection (7)" in both places where they occur there shall be substituted “ subsections (6A) and (7) ”.
(5)In section 26 of that Act (disposal value) in subsection (1) after paragraph (e) there shall be inserted—
“(ea)if that event is the grant of a right to use or otherwise deal with computer software for a consideration not consisting or not wholly consisting in money, equals the consideration in money which would have been given if the right had been granted in the open market;
(eb)unless paragraph (ea) above applies, if that event is the grant of a right to use or otherwise deal with computer software for no consideration or for a consideration in money lower than that which would have been given if the right had been granted in the open market, and otherwise than in circumstances such that—
(i)the grantee’s expenditure on the acquisition of the right can be taken into account in making allowances to him under this Part or under Part VII and the grantee is not a dual resident investing company which is connected with the grantor within the terms of section 839 of the principal Act, or
(ii)there is a charge to tax under Schedule E,
equals the consideration in money which would have been given if the right had been granted in the open market;
(ec)if that event is the grant of a right to use or otherwise deal with computer software and neither paragraph (ea) nor paragraph (eb) above applies, equals the net consideration in money received by the grantor in respect of the grant, together with any insurance moneys received by him in respect of the computer software by reason of any event affecting the consideration obtainable on the grant and, so far as it consists of capital sums, any other compensation of any description so received;”.
(6)After subsection (2) of that section there shall be inserted—
“(2AA)In deciding for the purposes of subsection (2) above whether the disposal value of machinery or plant consisting of computer software or the right to use or otherwise deal with computer software exceeds the capital expenditure incurred by a person on its provision, the disposal value shall (for the purposes of that subsection only) be taken to be increased by the amount of any disposal value which, in respect of that person and that machinery or plant, falls or has fallen to be taken into account for the purposes of section 24 by virtue of any previous event falling within subsection (6A)(c) of that section.”
(7)In section 37 of that Act (election for certain machinery or plant to be treated as short-life assets) in subsection (5) for the words “section 24(7)" there shall be substituted “ section 24(6A) and (7) ”.
(8)Subsection (1) above shall apply in relation to expenditure incurred on or after 10th March 1992.
(9)Subsections (2) to (6) above shall apply in relation to rights granted on or after 10th March 1992.
(10)Subsection (7) above shall be deemed to have come into force on 10th March 1992.
Commencement Information
I1S. 68(1)-(6) and (8)-(10) in force at Royal Assent; 68(7) in force at 10. 03. 1992 see s. 68(10).
Marginal Citations
(1)Section 68 of the M3Capital Allowances Act 1990 (which excludes certain expenditure relating to films, tapes and discs from being treated as capital expenditure for the purposes of Part II of that Act and gives relief by providing for such expenditure and other expenditure of a revenue nature to be allocated to relevant periods) shall be amended as follows.
(2)After subsection (6) there shall be inserted—
“(6A)To the extent that a deduction has been made in respect of any expenditure for a relevant period under section 42 of the Finance (No. 2) Act 1992 (relief for production or acquisition expenditure), no allocation of that expenditure shall be made under subsections (3) to (6) above.
(6B)Where subsection (6A) above applies, no expenditure incurred on the production or acquisition of the film, tape or disc concerned shall be allocated under subsections (3) to (6) above to the relevant period referred to in subsection (6A).”
(3)In subsection (9) (expenditure to which section 68 does not apply) after “expenditure" there shall be inserted “ in relation to which an election is made under this subsection and ”.
(4)After subsection (9) there shall be inserted—
“(9A)An election under subsection (9) above—
(a)shall relate to all expenditure incurred (or to be incurred) on the production or acquisition of the film, tape or disc in question,
(b)shall be made, by giving notice to the inspector in such form as the Board may determine, not later than two years after the end of the relevant period in which the film, tape or disc is completed, and
(c)shall be irrevocable.
(9B)For the purposes of subsection (9A)(b) above, a film, tape or disc is completed—
(a)at the time when it is first in a form in which it can reasonably be regarded as ready for copies of it to be made and distributed for presentation to the general public, or
(b)where the expenditure in question was incurred on the acquisition of the film, tape or disc and it was acquired after the time mentioned in paragraph (a) above, at the time it was acquired.
(9C)An election may not be made under subsection (9) above in relation to expenditure on a film, tape or disc if a claim has been made in respect of any of that expenditure under section 41 (relief for preliminary expenditure) or section 42 (relief for production or acquisition expenditure) of the Finance (No. 2) Act 1992.”
(5)Subsections (3) and (4) above shall have effect in relation to films, tapes and discs completed on or after 10th March 1992.
Schedule 13 to this Act (which makes provision in relation to capital allowances in respect of buildings and structures in enterprise zones) shall have effect.
(1)The M4Capital Allowances Act 1990 shall be amended as follows.
(2)In section 34 (writing-down allowances etc.) in subsection (1) for “£8,000" there shall be substituted “ £12,000 ”.
(3)In subsection (3) of that section for “£2,000" in each place where it occurs there shall be substituted “ £3,000 ”.
(4)In section 35 (contributions to expenditure and hiring of cars) in subsection (1) for “£8,000" and “£2,000" there shall be substituted “ £12,000 ” and “ £3,000 ” respectively.
(5)In subsection (2) of that section for “£8,000" in both places where it occurs there shall be substituted “ £12,000 ”.
(6)Subsections (2) and (3) above shall apply in relation to expenditure incurred or treated as incurred after 10th March 1992 unless the expenditure is incurred under a contract entered into on or before 10th March 1992.
(7)Subsection (4) above shall apply in relation to expenditure incurred after 10th March 1992 unless the expenditure is incurred under a contract entered into on or before 10th March 1992.
(8)Subsection (5) above shall apply in relation to expenditure on the hiring of a motor car under a contract entered into after 10th March 1992.