The AEA Technology plc (Capital Allowances) Order 1996

Explanatory Note

(This note is not part of the Order)

This Order makes provision determining certain writing-down allowances and capital allowances available to AEA Technology plc (“the Company”), being the successor to certain of the property, rights and liabilities of the United Kingdom Atomic Energy Authority (“the Authority”) by virtue of a scheme (“the Transfer Scheme”) made by the United Kingdom Atomic Energy Authority on 7th March 1996 pursuant to section 1(1) of the Atomic Energy Authority Act 1995(“the Act”) and to a direction given by the Secretary of State under section 2(1) of the Act dated 12th February 1996.

Section 3(3) of the Capital Allowances Act 1990 (“the 1990 Act”) provides for the calculation of the writing-down allowance in respect of a period which ends after the sale of the relevant interest in an industrial building or structure by reference to the residue of certain expenditure. In the case of expenditure incurred on or after 6th November 1962, the writing-down allowance for a chargeable period is the residue of the expenditure in question reduced in the proportion which the length of the chargeable period bears to the unexpired part, at the date of sale, of the period of 25 years beginning with the date on which the building or structure was first used.

Article 2(1) of this Order and Schedule 1 specify for the purposes of section 3(3) of the 1990 Act the amount that is to be taken as the residue in relation to industrial buildings and structures which vested in the Company on the transfer date (31st March 1996), in accordance with the Transfer Scheme.

Article 2(2) and Schedule 1 specify in relation to those buildings and structures the period which is to be treated as the unexpired part of the period of 25 years.

Article 3 of the Order and Schedule 2 specify the amount of capital expenditure that the Company is deemed to have incurred on the transfer date in respect of the machinery and plant (including motor cars and fixtures) which vested in it in accordance with the Transfer Scheme. These amounts are relevant for the purposes of calculating the capital allowances in respect of machinery and plant for which Part II of the 1990 Act provides.

Article 4 of the Order and Schedule 3 specify the amount of capital expenditure that the Company is deemed, for the purposes of Part VII of the 1990 Act, to have incurred on the transfer date on scientific research , in respect of the vesting in the Company of assets representing expenditure of a capital nature which was incurred by the Authority on scientific research directly undertaken by the Authority or on their behalf.

Articles 5 and 6 of the Order prescribe the amount of capital expenditure which, for the purposes of section 520 and 530 of the Income and Corporation Taxes Act 1988, the Company shall be treated as having incurred on the transfer date on the acquisition of (respectively) the patent rights and know-how which vested in the Company in accordance with the Transfer Scheme. The expenditure of the Authority on the patent rights and know-how in question was of a revenue rather than a capital nature, and the amount prescribed in each case is therefore nil.