Finance Act 2001

Section 70.

SCHEDULE 22 Remediation of contaminated land

Part 1 Deduction for capital expenditure

Deduction for capital expenditure

1 (1) This paragraph applies if—

(a) land in the United Kingdom is, or has been, acquired by a company for the purposes of a trade carried on by the company,

(b) at the time of acquisition all or part of the land is or was in a contaminated state (see paragraph 3), and

(c) the company incurs capital expenditure which is qualifying land remediation expenditure in respect of the land (see paragraph 2).

(2) For the purposes of corporation tax such capital expenditure as is qualifying land remediation expenditure shall (if the company so elects) be allowed as a deduction in computing the profits of the trade for the accounting period in which that expenditure is incurred.

(3) For the purposes of sub-paragraph (2) any capital expenditure incurred for the purposes of a trade by a company about to carry it on shall be treated as if it had been incurred by that company on the first day on which it does carry it on and in the course of doing so.

(4) Sub-paragraph (2) shall not apply to so much of the qualifying land remediation expenditure as—

(a) represents expenditure which has been allowed as a deduction in computing the profits arising from the trade for any accounting period preceding the period in which the expenditure is incurred, or

(b) represents capital expenditure in respect of which an allowance has been, or may be, made under the enactments relating to capital allowances.

(5) A company is not entitled to a deduction under this paragraph in respect of expenditure on land all or part of which is in a contaminated state, if the land is in that state wholly or partly as a result of any thing done or omitted to be done at any time by the company or a person with a relevant connection to the company.

(6) An election under this paragraph must specify the accounting period in respect of which it is made.

(7) The election must be made by notice in writing to the Inland Revenue.

(8) The notice must be given before the end of the period of two years beginning with the end of the company’s accounting period to which the election relates.

Qualifying land remediation expenditure

2 (1) For the purposes of this Schedule “qualifying land remediation expenditure” of a company means expenditure of the company that meets the conditions in sub-paragraphs (2) to (6).

(2) The first condition is that it is expenditure on land all or part of which is in a contaminated state (see paragraph 3).

(3) The second condition is that the expenditure is expenditure on relevant land remediation directly undertaken by the company or on its behalf (see paragraph 4).

(4) The third condition is that the expenditure is incurred—

(a) on employee costs (see paragraph 5), or

(b) on materials (see paragraph 6),

or is qualifying expenditure on sub-contracted land remediation (see paragraphs 9 to 11).

(5) The fourth condition is that the expenditure would not have been incurred had the land not been in a contaminated state (see paragraph 7).

(6) The fifth condition is that the expenditure is not subsidised (see paragraph 8).

Land in a contaminated state

3 (1) For the purposes of this Schedule land is in a contaminated state if, and only if, it is in such a condition, by reason of substances in, on or under the land, that—

(a) harm is being caused or there is a possibility of harm being caused; or

(b) pollution of controlled waters is being, or is likely to be, caused.

(2) For the purposes of this Schedule, a nuclear site is not land in a contaminated state.

(3) In this paragraph a “nuclear site” means—

(a) any site in respect of which a nuclear site licence is for the time being in force, or

(b) any site in respect of which, after the revocation or surrender of a nuclear site licence, the period of responsibility of the licensee has not yet come to an end;

and “nuclear site licence”, “licensee” and “period of responsibility” have the same meaning as in the Nuclear Installations Act 1965 (c. 57).

Relevant land remediation

4 (1) For the purposes of this Schedule relevant land remediation, in relation to land acquired by a company, means—

(a) activities falling within sub-paragraph (2), and

(b) if there are such activities, preparatory activity falling within sub-paragraph (4) which satisfies the condition in sub-paragraph (5).

(2) The activities referred to in sub-paragraph (1)(a) are the doing of any works, the carrying out of any operations or the taking of any steps in relation to—

(a) the land in question,

(b) any controlled waters affected by that land, or

(c) any land adjoining or adjacent to that land,

for the purpose described in sub-paragraph (3).

(3) The purpose referred to in sub-paragraph (2) is that of—

(a) preventing or minimising, or remedying or mitigating the effects of, any harm, or any pollution of controlled waters, by reason of which the land is in a contaminated state; or

(b) restoring the land or waters to their former state.

(4) The preparatory activity referred to in sub-paragraph (1)(b) is the doing of anything for the purpose of assessing the condition of—

(a) the land in question,

(b) any controlled waters affected by that land, or

(c) any land adjoining or adjacent to that land.

(5) Preparatory activity satisfies the condition referred to in sub-paragraph (1)(b) if it is activity connected to such activities falling within sub-paragraph (2) as are undertaken by the company (whether directly or on its behalf).

(6) For the purposes of this paragraph, controlled waters are “affected by” land in a contaminated state if, and only if, the land in question is in such a condition, by reason of substances in, on or under the land, that pollution of those waters is being, or is likely to be, caused.

Employee costs

5 (1) For the purposes of this Schedule the employee costs of a company are—

(a) the emoluments paid by the company to directors or employees of the company, including all salaries, wages, perquisites and profits whatsoever other than benefits in kind;

(b) the secondary Class 1 national insurance contributions paid by the company; and

(c) the contributions paid by the company to any pension fund (within the meaning of section 231A(4) of the Taxes Act 1988) operated for the benefit of directors or employees of the company.

(2) The employee costs of a company attributable to relevant land remediation are those paid to, or in respect of, directors or employees directly and actively engaged in that relevant land remediation.

(3) In the case of a director or employee partly engaged directly and actively in relevant land remediation the following rules apply—

(a) if the time he spends so engaged is less than 20% of his total working time, none of the employee costs relating to him are treated as attributable to relevant land remediation;

(b) if the time he spends so engaged is more than 80% of his total working time, the whole of the employee costs relating to him are treated as attributable to relevant land remediation;

(c) in any other case, an appropriate proportion of the employee costs relating to him are treated as attributable to relevant land remediation.

(4) For the purpose of sub-paragraphs (2) and (3) persons who provide services, such as secretarial or administrative services, in support of activities carried on by others, are not, by virtue of providing those services, to be treated as themselves directly and actively engaged in those activities.

Expenditure on materials

6 For the purposes of this Schedule expenditure on materials is attributable to relevant land remediation if the materials are employed directly in that relevant land remediation.

Expenditure incurred because of contamination

7 (1) Without prejudice to the generality of paragraph 2(5), this paragraph has effect for the purpose of determining whether expenditure would or would not have been incurred had not all or part of the land been in a contaminated state.

(2) If expenditure on the land is increased by reason only that the land is in a contaminated state, the amount by which such expenditure is increased shall be considered to be expenditure satisfying the condition in paragraph 2(5).

(3) If any works are done, operations are carried out or steps are taken mainly for the purpose described in paragraph 4(3), expenditure on such works, operations or steps shall be taken to satisfy the condition in paragraph 2(5).

Subsidised expenditure

8 (1) For the purposes of this Schedule a company’s expenditure is treated as subsidised to the extent that—

(a) a grant or subsidy is obtained in respect of the expenditure; or

(b) it is otherwise met directly or indirectly by any person other than the company.

(2) For the purposes of this Schedule a grant, subsidy or payment that is not allocated to particular expenditure shall be allocated to expenditure of the recipient in such manner as is just and reasonable.

Qualifying expenditure on sub-contracted land remediation

9 (1) The provisions of paragraphs 10 and 11 have effect for determining the amount of the qualifying expenditure of a company (“the company”) on sub-contracted land remediation.

(2) For the purposes of this Schedule the company incurs expenditure on sub-contracted land remediation if it makes a payment (a “sub-contractor payment”) to another person (“the sub-contractor”) in respect of relevant land remediation contracted out by the company to that person.

Treatment of expenditure where company and sub-contractor are connected persons

10 (1) Where—

(a) the company and the sub-contractor are connected persons, and

(b) in accordance with normal accounting practice—

(i) the whole of the sub-contractor payment has been brought into account in determining the sub-contractor’s profit or loss for a relevant period, and

(ii) all of the sub-contractor’s relevant expenditure has been so brought into account,

the whole of the payment (up to the amount of the sub-contractor’s relevant expenditure) is qualifying expenditure on sub-contracted land remediation.

(2) In sub-paragraph (1)—

(a) references to the “relevant expenditure” of the sub-contractor are to expenditure that—

(i) is incurred by the sub-contractor in carrying on, on behalf of the company, the activities to which the sub-contractor payment relates,

(ii) is not of a capital nature,

(iii) is incurred on employee costs or materials, and

(iv) is not subsidised;

(b) a “relevant period” means a period—

(i) for which accounts are drawn up for the sub-contractor, and

(ii) that ends not more than twelve months after the end of the company’s period of account in which the sub-contractor payment is, in accordance with normal accounting practice, brought into account in determining the company’s profit or loss.

(3) Paragraph 5 (employee costs) and paragraph 8 (subsidised expenditure) apply for the purposes of determining whether the sub-contractor’s expenditure meets the requirements of sub-paragraph (2)(a)(iii) and (iv).

For this purpose the references in those paragraphs to a company shall be read as references to the sub-contractor.

(4) Any apportionment of expenditure of the company or the sub-contractor necessary for the purposes of this paragraph shall be made on a just and reasonable basis.

Treatment of sub-contractor payment in other cases

11 Where—

(a) the company makes a sub-contractor payment, and

(b) paragraph 10 (treatment of expenditure where company and sub-contractor are connected) does not apply,

the whole of the amount of the sub-contractor payment is treated as qualifying expenditure on sub-contracted land remediation.

Part 2 Entitlement to land remediation relief

Entitlement to relief

12 (1) This paragraph applies if—

(a) land in the United Kingdom is, or has been, acquired by a company for the purposes of a Schedule A business or a trade carried on by the company,

(b) at the time of acquisition all or part of the land is or was in a contaminated state, and

(c) the company incurs qualifying land remediation expenditure in respect of the land.

(2) A company is entitled to land remediation relief for an accounting period if the company’s qualifying land remediation expenditure is deductible in that period.

(3) The company’s qualifying land remediation expenditure is deductible in that period if it is allowable as a deduction in computing for tax purposes the profits for that period of a Schedule A business or a trade carried on by the company.

(4) A company is not entitled to land remediation relief in respect of expenditure on land all or part of which is in a contaminated state, if the land is in that state wholly or partly as a result of any thing done or omitted to be done at any time by the company or a person with a relevant connection to the company.

Part 3 Manner of giving effect to relief

Deduction in computing profits of Schedule A business or trade

13 Where—

(a) a company is entitled to land remediation relief for an accounting period,

(b) it is carrying on a Schedule A business or a trade in that period, and

(c) it has qualifying land remediation expenditure that is allowable as a deduction in computing for tax purposes the profits of the Schedule A business or the trade for that period,

it may (on making a claim) treat that qualifying land remediation expenditure as if it were an amount equal to 150% of the actual amount.

Entitlement to land remediation tax credit

14 (1) A company may claim a land remediation tax credit if in an accounting period it has a “qualifying land remediation loss”.

(2) A company has a “qualifying land remediation loss” for this purpose if in an accounting period—

(a) paragraph 13 applies, and

(b) the company incurs a Schedule A loss or a trading loss in that period in the Schedule A business or the trade referred to in paragraph 13(b).

(3) The amount of the qualifying land remediation loss is equal to the lesser of—

(a) 150% of the related qualifying land remediation expenditure, and

(b) so much of the company’s Schedule A loss or trading loss as is unrelieved.

(4) For this purpose the amount of a Schedule A loss or trading loss that is “unrelieved” is the amount of that loss reduced by the amount of—

(a) any relief that was or could have been obtained by the company making a claim under section 392A(1) or 393A(1)(a) of the Taxes Act 1988 to set the loss against profits of whatever description of the same accounting period,

(b) any other relief obtained by the company in respect of the loss, including relief under section 393A(1)(b) of that Act (losses set against profits of an earlier accounting period), and

(c) any loss surrendered under section 403(1) of that Act (surrender of relief to group or consortium members).

(5) No account shall be taken for this purpose of—

(a) any Schedule A losses or trading losses brought forward from an earlier accounting period under section 392A(2) or 393(1) of the Taxes Act 1988, or

(b) any trading losses carried back from a later accounting period under section 393A(1)(b) of that Act.

(6) Sub-paragraphs (7) to (9) apply for the purpose of determining the amount of a Schedule A loss that is “unrelieved” in an accounting period in a case where the Schedule A loss is a loss treated under section 432AB(3) of the Taxes Act 1988 as an amount of expenses of management under section 76 of that Act.

(7) If in that accounting period no amount falls to be carried forward to a succeeding accounting period under section 75(3) of the Taxes Act 1988 (carrying forward expenses of management and charges on income where such expenses and charges exceed amount of profits from which deductible), no amount of the Schedule A loss is unrelieved.

(8) If in that accounting period an amount falls to be carried forward to a succeeding accounting period under section 75(3) of that Act, the amount of the Schedule A loss that is unrelieved is equal to the lesser of—

(a) the amount of the Schedule A loss, and

(b) the amount which so falls to be carried forward.

(9) In determining for the purposes of sub-paragraphs (7) and (8) whether there is an amount which falls to be carried forward under section 75(3) of the Taxes Act 1988, there shall be disregarded any amounts brought forward from an earlier accounting period and treated as expenses of management for the period in question by virtue of—

(a) a previous application of section 75(3) of that Act, or

(b) paragraph 4(4) of Schedule 11 to the Finance Act 1996 (c. 8) (loan relationships deficit carried forward and treated as expenses of management).

(10) If—

(a) the company is an insurance company, and

(b) it is treated under section 432AA of the Taxes Act 1988 as carrying on more than one Schedule A business,

references in this paragraph to a Schedule A loss shall be construed in accordance with section 432AB(4) or (6) of that Act (aggregation of losses where an insurance company is treated under section 432AA as having more than one Schedule A business).

Amount of land remediation tax credit

15 (1) The amount of the land remediation tax credit to which a company is entitled for an accounting period is an amount equal to 16% of the amount of the qualifying land remediation loss for the period.

(2) The Treasury may by order substitute for the percentage for the time being specified in sub-paragraph (1) such other percentage as they think fit.

(3) An order under sub-paragraph (2) may make such incidental, supplemental, consequential or transitional provision as the Treasury think fit.

Payment in respect of land remediation tax credit

16 (1) Where—

(a) the company is entitled to a land remediation tax credit for an accounting period, and

(b) makes a claim,

the Inland Revenue shall pay to the company the amount of the credit.

(2) An amount payable in respect of—

(a) a land remediation tax credit, or

(b) interest on a land remediation tax credit under section 826 of the Taxes Act 1988,

may be applied in discharging any liability of the company’s to pay corporation tax, and to the extent that it is so applied the Inland Revenue’s obligation under sub-paragraph (1) is discharged.

(3) Where the company’s company tax return for the accounting period is enquired into by the Inland Revenue, no payment in respect of a land remediation tax credit for that period need be made before the Inland Revenue’s enquiries are completed (see paragraph 32 of Schedule 18 to the Finance Act 1998 (c. 36)).

In those circumstances the Inland Revenue may make a payment on a provisional basis of such amount as they think fit.

(4) No payment need be made in respect of a land remediation tax credit for an accounting period before the company has paid to the Inland Revenue any amount that it is required to pay for payment periods ending in that accounting period—

(a) under the PAYE regulations, or

(b) in respect of Class 1 national insurance contributions.

(5) In this paragraph—

• “PAYE regulations” means regulations under section 203 of the Taxes Act 1988;

• “payment period” means a period which ends on the 5th day of a month and for which the company is liable to account for income tax and national insurance contributions to the Inland Revenue.

Restriction on losses carried forward

17 (1) For the purposes of section 392A of the Taxes Act 1988 (relief of Schedule A losses against future Schedule A losses), a company’s Schedule A loss for a period in which it claims a land remediation tax credit is treated as reduced by the amount of the loss surrendered.

(2) For the purposes of section 393 of the Taxes Act 1988 (relief of trading losses against future trading profits), a company’s trading loss for a period for which it claims a land remediation tax credit is treated as reduced by the amount of the loss surrendered.

(3) Sub-paragraph (4) applies if in an accounting period—

(a) a company’s Schedule A loss is a loss treated under section 432AB(3) of the Taxes Act 1988 as an amount of expenses of management under section 76 of that Act,

(b) an amount falls to be carried forward to a succeeding accounting period under section 75(3) of that Act (carrying forward expenses of management and charges on income where such expenses and charges exceed amount of profits from which deductible), and

(c) the company claims a land remediation tax credit for the accounting period.

(4) Where this sub-paragraph applies, the amount which falls to be carried forward to a succeeding accounting period under section 75(3) of the Taxes Act 1988 is treated as reduced by the amount of the loss surrendered.

(5) For the purposes of this paragraph the amount of the loss surrendered is—

(a) where the maximum amount of land remediation tax credit was claimed, the whole of the qualifying land remediation loss for that period;

(b) where less than the maximum amount was claimed, a corresponding proportion of the qualifying land remediation loss for that period.

The “maximum amount” here means the amount specified in paragraph 15(1).

Tax credit not income

18 A payment in respect of a land remediation tax credit is not income of the company for any tax purpose.

Certain qualifying land remediation expenditure excluded for purposes of capital gains

19 If in an accounting period—

(a) a company has a qualifying land remediation loss, and

(b) by virtue of that qualifying land remediation loss, a payment is made to the company in respect of a land remediation tax credit,

the related qualifying land remediation expenditure shall be treated as if it were expenditure excluded for the purposes of capital gains tax under section 39 of the Taxation of Chargeable Gains Act 1992 (c. 12).

Part 4 Special provision for life assurance business

Limitation on relief

20 Where for any accounting period the profits arising to an insurance company from its life assurance business, or from any category of its life assurance business, fall to be computed in accordance with the provisions of the Taxes Act 1988 applicable to Case I of Schedule D, no deduction for capital expenditure under paragraph 1 and no land remediation relief under paragraph 12 shall be allowable.

Provision in respect of “I minus E” basis

21 Paragraphs 22 to 28 apply where for any accounting period the profits arising to an insurance company from its life assurance business fall to be computed otherwise than in accordance with the provisions of the Taxes Act 1988 applicable to Case I of Schedule D.

Entitlement to relief: “I minus E” basis

22 (1) Sub-paragraph (2) applies if—

(a) land in the United Kingdom is a management asset of a company,

(b) at the time of acquisition by the company all or part of the land is or was in a contaminated state, and

(c) in any accounting period, the company incurs qualifying expenditure in respect of the land.

(2) Where this sub-paragraph applies, the company is entitled to relief for that accounting period in respect of its qualifying expenditure.

(3) For the purposes of this paragraph, the amount of a company’s qualifying expenditure in an accounting period is the amount of its qualifying land remediation expenditure in that period reduced by the amount (if any) which by virtue of section 76(1)(d) of the Taxes Act 1988 is not to be treated as expenses of management.

(4) A company is not entitled to relief under this paragraph in respect of expenditure on land all or part of which is in a contaminated state, if the land is in that state wholly or partly as a result of any thing done or omitted to be done at any time by the company or a person with a relevant connection to the company.

(5) For the purposes of this paragraph, land is a management asset of a company if it is—

(a) an asset provided for use or used for the management of life assurance business carried on by the company, or

(b) an asset in respect of which expenditure is being incurred with a view to such use by the company.

Giving effect to relief: enhanced expenses of management

23 (1) If a company is entitled to relief under paragraph 22 for an accounting period in respect of its qualifying expenditure, sub-paragraph (2) shall apply for the purposes of section 76 of the Taxes Act 1988 (computing profits of company carrying on life assurance business: deduction of expenses of management etc).

(2) Where this sub-paragraph applies, the company may (on making a claim) treat an amount equal to 150% of the actual amount of the qualifying expenditure (as determined in accordance with paragraph 22(3)) as part of its expenses of management for that period.

Entitlement to life assurance company tax credit

24 (1) A company may claim a life assurance company tax credit under this paragraph if in an accounting period it has a “qualifying loss”.

(2) A company has a “qualifying loss” for this purpose if in an accounting period—

(a) the company is entitled to relief under paragraph 22, and

(b) an amount falls to be carried forward to a succeeding accounting period under section 75(3) of the Taxes Act 1988 (carrying forward expenses of management and charges on income where such expenses and charges exceed amount of profits from which deductible).

(3) In determining for the purposes of sub-paragraph (2)(b) whether there is an amount which falls to be carried forward under section 75(3) of that Act, there shall be disregarded any amounts brought forward from an earlier accounting period and treated as expenses of management for the period in question by virtue of—

(a) a previous application of section 75(3) of that Act, or

(b) paragraph 4(4) of Schedule 11 to the Finance Act 1996 (c. 8) (loan relationships deficit carried forward and treated as expenses of management).

(4) The amount of the qualifying loss is equal to the lesser of—

(a) 150% of the related qualifying expenditure, and

(b) such amount as is determined in accordance with sub-paragraph (3) to be an amount which falls to be carried forward as described in sub-paragraph (2)(b).

Amount of life assurance company tax credit

25 (1) The amount of the life assurance company tax credit to which a company is entitled for an accounting period is equal to 16% of the amount of the qualifying loss for the period.

(2) The Treasury may by order substitute for the percentage for the time being specified in sub-paragraph (1) such other percentage as they think fit.

(3) An order under sub-paragraph (2) may make such incidental, supplemental, consequential or transitional provision as the Treasury think fit.

Payment in respect of life assurance company tax credit, etc

26 Paragraph 16 (payment) and paragraph 18 (tax credit not to be treated as income) shall have effect in relation to life assurance company tax credits with the substitution for each reference to a land remediation tax credit of a reference to a life assurance company tax credit.

Restriction on carrying forward expenses of management

27 (1) For the purposes of subsection (3) of section 75 of the Taxes Act 1988 (carrying forward expenses of management and charges on income where they exceed amount of profits from which deductible), the amount which may be carried forward under that subsection for a period in which the company claims a life assurance company tax credit is treated as reduced by the amount of the expenses of management surrendered.

(2) For the purposes of sub-paragraph (1) the amount of the expenses of management surrendered is—

(a) where the maximum amount of life assurance company tax credit was claimed, the whole of the qualifying loss for that period;

(b) where less than the maximum amount was claimed, a corresponding proportion of the qualifying loss for that period.

The “maximum amount” here means the amount specified in paragraph 25(1).

Certain qualifying expenditure excluded for purposes of capital gains

28 If in an accounting period—

(a) a company has a qualifying loss, and

(b) by virtue of that qualifying loss, a payment is made to the company in respect of a life assurance company tax credit,

the related qualifying expenditure shall be treated as if it were expenditure excluded for the purposes of capital gains tax under section 39 of the Taxation of Chargeable Gains Act 1992 (c. 12).

Part 5 Supplementary provisions

Artificially inflated claims for deduction, relief or tax credit

29 (1) To the extent that a transaction is attributable to arrangements entered into wholly or mainly for a disqualifying purpose, it shall be disregarded in determining for an accounting period the amount of—

(a) any deduction for capital expenditure which is allowed under paragraph 1,

(b) any land remediation relief to which a company is entitled under paragraph 12,

(c) any land remediation tax credit to which a company is entitled under paragraph 14,

(d) any relief to which a company carrying on life assurance business is entitled under paragraph 22, and

(e) any life assurance company tax credit to which such a company is entitled under paragraph 24.

(2) Arrangements are entered into wholly or mainly for a “disqualifying purpose” if their main object, or one of their main objects, is to enable a company to obtain—

(a) a deduction for capital expenditure which would not otherwise be allowed or of a greater amount than that which would otherwise be allowed;

(b) land remediation relief to which the company would not otherwise be entitled or of a greater amount than that to which it would otherwise be entitled;

(c) a land remediation tax credit to which it would not otherwise be entitled or of a greater amount than that to which it would otherwise be entitled;

(d) relief under paragraph 22 to which it would not otherwise be entitled or of a greater amount than that to which it would otherwise be entitled; or

(e) a life assurance company tax credit to which it would not otherwise be entitled or of a greater amount than that to which it would otherwise be entitled.

(3) In this paragraph “arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable.

Funding of tax credits

30 Section 10 of the Exchequer and Audit Departments Act 1866 (c. 39) (gross revenues to be paid to Exchequer) shall be construed as allowing the Commissioners of Inland Revenue to deduct payments for or in respect of—

(a) land remediation tax credits, and

(b) life assurance company tax credits,

before causing the gross revenues of their department to be paid to the accounts mentioned in that section.

Interpretation

31 (1) In this Schedule—

• “harm” means—

  (a)

  harm to the health of living organisms,

  (b)

  interference with the ecological systems of which any living organisms form part,

  (c)

  offence to the senses of human beings, or

  (d)

  damage to property;

• “the Inland Revenue” means any officer of the Board;

• “insurance company” has the same meaning as it has in Chapter 1 of Part 12 of the Taxes Act 1988;

• “land” means any estate, interest or rights in or over land;

• “life assurance business” has the same meaning as it has in Chapter 1 of Part 12 of the Taxes Act 1988;

• “national insurance contributions” means contributions under Part 1 of the Social Security Contributions and Benefits Act 1992 (c. 4) or Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7);

• “pollution of controlled waters” means the entry into controlled waters of any poisonous, noxious or polluting matter or any solid waste matter;

• “qualifying loss” has the meaning given in paragraph 24;

• “qualifying land remediation loss” has the meaning given in paragraph 14;

• “Schedule A loss” has the meaning given by section 392A of the Taxes Act 1988; and

• “substance” means any natural or artificial substance, whether in solid or liquid form or in the form of a gas or vapour.

(2) In this Schedule “controlled waters”—

(a) in relation to England and Wales, has the same meaning as in Part 3 of the Water Resources Act 1991 (c. 57);

(b) in relation to Scotland, has the same meaning as in section 30A of the Control of Pollution Act 1974 (c. 40);

(c) in relation to Northern Ireland, means water in waterways and underground strata (as defined in Article 2(2) of the Water (Northern Ireland) Order 1999 (S.I. 1999/662 (N.I. 6)) ).

(3) For the purposes of this Schedule, a person has a relevant connection to a company in a case where the company’s land is in a contaminated state wholly or partly as a result of any thing done or omitted to be done by the person if—

(a) he is or was connected to the company when any such thing is or was done, or omitted to be done, by him,

(b) he is or was connected to the company at the time when the land in question is or was acquired by the company, or

(c) he is or was connected to the company at any time when relevant land remediation is or was undertaken by the company (whether directly or on its behalf).

(4) Section 839 of the Taxes Act 1988 (connected persons) applies for the purposes of this Schedule.

Transitional provisions

32 (1) This Schedule does not apply to expenditure incurred before the day on which this Act is passed.

(2) For this purpose no account shall be taken of section 401 of the Taxes Act 1988 (earlier expenditure treated as incurred when Schedule A business or trading begins).