Finance Act 2009

Capital allowances

Introductory

13 (1) Paragraphs 14 to 17 make provision about the treatment, for the purposes of CAA 2001, of transactions relating to land in connection with an alternative finance investment bond.

(2) Any expression which is used in any of paragraphs 14 to 17 and in CAA 2001 has the meaning which it has in that Act.

Treatment for purposes of capital allowances

14 (1) This paragraph applies to an asset if—

(a) each of conditions A to C is met before the end of the period of 30 days beginning with the effective date of the first transaction, and

(b) the asset falls within sub-paragraph (2).

(2) An asset falls within this sub-paragraph if it is part of the subject matter of the first transaction and constitutes—

(a) plant or machinery, or

(b) an industrial building (or part of an industrial building).

(3) For the purposes of CAA 2001—

(a) expenditure incurred by Q in acquiring the asset by virtue of the first transaction is not to be regarded as capital expenditure, and

(b) Q is not to be regarded as becoming, and P is not to be regarded as ceasing to be, the owner of the asset by virtue of that transaction.

(4) Sub-paragraph (3) applies in relation to the transactions mentioned in sub-paragraph (5) as it applies in relation to the first transaction (but reading the references to Q as references to P and the reference to P as a reference to Q).

(5) The transactions are—

(a) any leaseback agreement entered into by Q and P in order that condition C is met, and

(b) the second transaction.

(6) This paragraph is subject to paragraphs 15 to 17.

Loss or destruction of asset

15 (1) This paragraph applies to an asset if the first and second conditions are met.

(2) The first condition is that the asset—

(a) is part of the subject matter of the first transaction, and

(b) constitutes plant or machinery.

(3) The second condition is that, at any time when the asset is held as a bond asset, one of the following events occurs—

(a) the person with possession of the asset loses possession of it in circumstances where it is reasonable to assume that the loss is permanent, or

(b) the asset ceases to exist as such (as a result of destruction, dismantling or otherwise).

(4) That event is to be treated as a disposal event (in relation to P) occurring in the chargeable period in which that event occurs.

(5) For the purposes of sub-paragraph (4), the disposal value that P is required to bring into account is—

(a) where the case falls within item 3 or 4 of the Table in section 61(2) of CAA 2001 and the amount received by P as mentioned in that item is other than zero, that amount, and

(b) in any other case, the market value of the asset at the time of the event.

Q retaining asset when no longer held for purposes of bond

16 (1) This paragraph applies to an asset if the first and second conditions are met.

(2) The first condition is that the asset is part of the subject matter of the first transaction and constitutes—

(a) plant or machinery, or

(b) an industrial building (or part of an industrial building).

(3) The second condition is that Q—

(a) ceases to hold the asset as a bond asset (whether at the end of the bond term or at any other time), but

(b) does not transfer the asset to P or any other person.

(4) At the time that Q ceases to hold the asset as a bond asset, Q is to be treated as becoming, and P is to be treated as ceasing to be, the owner of the asset.

(5) Accordingly, Q’s ceasing to hold the asset as a bond asset is to be treated—

(a) as regards plant or machinery, as a disposal event (in relation to P) occurring in the chargeable period in which the cessation takes place, and

(b) as regards an industrial building or part of an industrial building, as a balancing event (in relation to P) occurring in the chargeable period in which the cessation takes place.

(6) For the purposes of sub-paragraph (5)—

(a) in the case falling within paragraph (a), the disposal value that P is required to bring into account is the market value of the asset at the time of the transfer, and

(b) in the case falling within paragraph (b), P is to be treated as receiving, as the proceeds of the balancing event, the market value of the asset at the time of the transfer.

Q transferring asset to third person

17 (1) This paragraph applies to an asset if the first and second conditions are met.

(2) The first condition is that the asset is part of the subject matter of the first transaction and constitutes—

(a) plant or machinery, or

(b) an industrial building (or part of an industrial building).

(3) The second condition is that Q transfers the asset to any person other than P.

(4) At the time that Q transfers the asset, that other person is to be treated as becoming, and P is to be treated as ceasing to be, the owner of the asset.

(5) Accordingly, the transfer is to be treated—

(a) as regards plant or machinery, as a disposal event (in relation to P) occurring in the chargeable period in which the transfer takes place, and

(b) as regards an industrial building or part of an industrial building, as a balancing event (in relation to P) occurring in the chargeable period in which the transfer takes place.

(6) For the purposes of sub-paragraph (5)—

(a) in the case falling within paragraph (a), the disposal value that P is required to bring into account is the market value of the asset at the time of the transfer, and

(b) in the case falling within paragraph (b), P is to be treated as receiving, as the proceeds of the balancing event, the market value of the asset at the time of the transfer.