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Capital Allowances Act 2001

Chapter 11: Giving effect to allowances and charges
Overview

1183.This Chapter provides how allowances and charges under Part 3 are given effect.

1184.Section 352 gives the rule for trades. Allowances and charges are treated as expenses and receipts of the trade. The same rule applies for professions and vocations occupying commercial buildings built with qualifying enterprise zone expenditure.

1185.Section 353 deals with buildings which are leased or licensed. The allowances and charges are treated as expenses and receipts of the person’s:

  • Schedule A business; or

  • overseas property business;

as appropriate.  If the building is not an asset of any property business then the person is treated as carrying on a Schedule A business and the allowances and charges are given effect in that notional business.

1186.Section 354 provides for allowances and charges for certain buildings temporarily out of use to be given as if they were leased or licensed.

1187.Section 355 contains special rules under which balancing allowances in respect of industrial buildings used for mining may be carried back to earlier chargeable periods.

Section 352: Trades

1188.This section is based on parts of sections 9, 140, 144 and 161 of CAA 1990. It deals with allowances and charges under Part 3 for trades and, for commercial buildings, professions and vocations.

1189.There is a minor change. This is to provide for allowances and charges on commercial buildings to be given effect for professions and vocations. See Change 36 in Annex 1.

1190.Subsection (3) makes clear that the general rule in subsection (1) may be displaced by subsequent provisions.

Section 353: Lessors and licensors

1191.This section is based on sections 9 and 161(2A) of CAA 1990. It gives effect to allowances and charges in respect of an industrial building which is leased or licensed.

1192.Section 9 of CAA 1990 refers only to a Schedule A business. But section 161(2A) means this must be read as including an overseas property business. This section deals with both explicitly. So it gives effect to allowances and charges in the business of which the building is an asset. See Note 47 in Annex 2.

1193.Subsection (4) deals with the case in which this section applies but the person’s interest in the building is not an asset of any property business. As in CAA 1990, it provides a notional Schedule A business in which allowances and charges are given effect.

Section 354: Buildings temporarily out of use

1194.This section is based on section 15ZA of CAA 1990. It deals with the way allowances or charges are given effect if there has been temporary disuse of the building but it is still treated as an industrial building.

1195.Subsection (2) deals with cases in which a trade is discontinued or the relevant interest was subject to a lease or licence which ends. It provides for section 353(4) to apply so allowances and charges can be given effect.

1196.Subsection (3) provides that if:

  • liability to a balancing charge arises; and

  • the person liable last used the industrial building for the purposes of a trade which has subsequently ceased,

then certain deductions may be made from that balancing charge. The deductions are those allowable under section 105 of ICTA against income from post cessation receipts and so on.

1197.Subsection (4) makes clear this does not prevent other deductions.

1198.Subsection (5) excludes from this section events which are treated as the permanent discontinuance of a trade by sections 113(1) or 337(1) of ICTA.

1199.Subsection (6) provides that in the case of a commercial building (see section 281), the word “trade” includes a profession or vocation. This is a minor change. See Change 36 in Annex 1.

Section 355: Buildings for miners etc.: carry-back of balancing allowances

1200.This section is based on section 17(1) and (2) of CAA 1990. It provides for balancing allowances in respect of certain mining structures to be carried back to earlier chargeable periods.

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