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Corporation Tax Act 2009

Chapter 2: Reliefs for expenditure on contaminated land
Section 1147: Deduction for capital expenditure

2946.This section gives the company a deduction for capital expenditure included in qualifying land remediation expenditure subject to certain conditions. It is based on paragraph 1 of Schedule 22 to FA 2001.

2947.The company must elect to make the deduction. The procedure for making the election is in section 1148.

2948.Capital expenditure is not defined. It is expenditure for which a deduction would normally be denied by section 53. But this section permits a deduction for capital expenditure in calculating the profits of a trade or UK property business of a company in spite of the rule in section 53.

2949.The existence of section 53 means it is not necessary to rewrite paragraph 1(4)(a) of Schedule 22 to FA 2001. That provision denies relief for expenditure that has already been allowed as a deduction in calculating the profits of a trade or of a UK property business carried on by the company. It is not needed if there is already a specific rule preventing a deduction for such expenditure.

2950.Subsection (7) is a similar provision to section 61. It treats capital expenditure incurred on contaminated land that will be used for the purposes of a trade or UK property business as incurred on the day the trade or business starts. Unlike section 61 there is no time limit on how far in advance of the trade or business starting the expenditure must be incurred.

Section 1148: Election under section 1147

2951.This section sets out the requirements for making an election. It is based on paragraph 1 of Schedule 22 to FA 2001.

Section 1149: Additional deduction for qualifying land remediation expenditure

2952.This section entitles a company to make a claim increasing the deduction given in calculating its trade or UK property business profits if certain conditions are met. It is based on paragraphs 12 and 13 of Schedule 22 to FA 2001.

2953.Subsection (1) is a further example of Change 77 in Annex 1 where it is made clear that the additional relief applies only for corporation tax.

2954.This section applies to expenditure that is allowed as a deduction in computing taxable profits either as a normal revenue deduction or through the operation of section 1147. The relief increases the amount of the deduction by 50%.

2955.The additional deduction has to be claimed. There is no special procedure for making the claim. The ordinary rules in Part 7 of Schedule 18 to FA 1998 apply.

Section 1150: No relief if company responsible for contamination

2956.This section denies relief if the company or a person connected with it was responsible for any part of the contamination. It is based on paragraphs 1 and 12 of Schedule 22 to FA 2001.

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