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Capital Allowances Act 2001

Section 407: Acquisition of mineral asset owned by previous trader

1411.This section is based on section 115 and parts of sections 113 and 114 of CAA 1990. There is a minor change in subsection (1)(a) as in sections 400 and 403 (paragraphs 1381 and 13961396 above). See Change 47 in Annex 1.

1412.Subsection (5)(a) treats part of the trader’s expenditure on acquiring the mineral asset as qualifying expenditure on mineral exploration and access in those cases if this section applies.

1413.Subsection (5)(b) makes a corresponding reduction to the trader’s expenditure on acquiring the mineral asset.

  • Example

  • Assume that:

    (a)

    mineral extraction trader B acquires for £1,000 a mineral asset that used to be owned by a previous trader P; and

    (b)

    P had incurred £50 capital expenditure on mineral exploration and access and this capital expenditure is reflected as to £100 (of B’s purchase price) in the value of the mineral asset.

  • £50 is the lower of the two amounts in (b). B is treated as incurring:

    (i)

    £50 of qualifying expenditure on mineral exploration and access; and

    (ii)

    only £950 on the purchase of the mineral asset – but it may not all be qualifying expenditure because other restrictions in Chapter 3 or 4 may apply.

1414.There is nothing in this section for section 115(2)(b) of CAA 1990 which is unnecessary. See Note 52 in Annex 2.

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