1564.This section is based on sections 138(5) and 139(5) of CAA 1990. Section 138(5) is particularly difficult to follow. Its reference to “the person carrying on the trade” might suggest that demolition costs are ignored if they are incurred before the trade commences. This section proceeds on the basis that such costs ought not to be ignored. See Change 52 in Annex 1.
1565.Subsections (1) to (3) allow the net demolition costs of an asset representing qualifying expenditure to reduce the disposal value that arises on that demolition.
1566.Subsections (4) and (5) provide for an allowance if the net demolition costs are greater than the disposal value. But only if, prior to demolition, the asset has only ever been used for R&D related to the relevant trade.
1567.Subsection (6) stops the demolition costs being taken into account more than once.