Finance Act 1982

CHAPTER II Capital Allowances

70 Allowances for assets leased outside the United Kingdom

(1) The provisions of this section have effect with respect to expenditure on the provision of machinery or plant for leasing where the machinery or plant is at any time in the requisite period used for the purpose of being leased to a person who—

(a) is not resident in the United Kingdom, and

(b) does not use the machinery or plant for the purposes of a trade carried on there or for earning profits or gains chargeable to tax by virtue of section 38(4) of the [1973 c. 51.] Finance Act 1973,

and where the leasing is not short-term leasing.

(2) In its application to expenditure falling within subsection (1) above, section 44 of the [1971 c. 68.] Finance Act 1971 (writing-down allowances and balancing adjustments) as it has effect—

(a) in accordance with section 65 of the [1980 c. 48.] Finance Act 1980 (assets leased in the course of a trade), or

(b) in accordance with paragraph 6 of Schedule 8 to the Finance Act 1971 (effect of subsidies towards wear and tear of assets), or

(c) in accordance with paragraph 10 of that Schedule (cars costing more than £8,000), or

(d) with respect to any motor car to which paragraph 11 of that Schedule applies (contributions towards expenditure on cars costing more than £8,000), or

(e) with respect to machinery or plant to which section 46 of the Finance Act 1971 applies (assets leased otherwise than in the course of a trade),

shall have effect, subject to subsection (4) below, as if the reference in subsection (2) of section 44 to 25 per cent, were a reference to 10 per cent.

(3) In any case where—

(a) machinery or plant is used for the purpose of being leased to such a person as is referred to in paragraphs (a) and (b) of subsection (1) above, and

(b) the circumstances are such that the machinery or plant is used otherwise than for a qualifying purpose, within the meaning of section 64 of the Finance Act 1980 (exclusion of first-year allowances for certain leased assets),

any question whether that use falls within the requisite period, as defined in subsection (8) of that section, shall be determined as if, for each reference in that subsection to four years, there were substituted a reference to ten years; and any reference to the requisite period in sections 66 and 67 of that Act shall be construed accordingly.

(4) No first year allowances, balancing allowances or writing-down allowances shall be available in respect of expenditure falling within subsection (1) above if the circumstances are as mentioned in subsection (3) (b) above and—

(a) there is a period of more than one year between the dates on which any two consecutive payments become due under the lease ; or

(b) any payments other than periodical payments are due under the lease or under any agreement which might reasonably be construed as being collateral to the lease; or

(c) disregarding variations made under the terms of the lease which are attributable to—

(i) changes in the rate of corporation tax or income tax, or

(ii) changes in the rate of capital allowances, or

(iii) changes in any rate of interest where the changes are linked to changes in the rate of interest applicable to inter-bank loans, or

(iv) changes in the premiums charged for insurance of any description by a person who is not connected with the lessor or the lessee,

any of the payments due under the lease or under any such agreement as is referred to in sub-paragraph (b) above, expressed as monthly amounts over the period for which that payment is due, is not the same as any other such payment expressed in the same way ; or

(d) either the lease is expressed to be for a period which exceeds thirteen years or there is, in the lease or a separate agreement, provision for extending or renewing the lease or for the grant of a new lease so that, by virtue of that provision, the machinery or plant could be leased for a period which exceeds thirteen years; or

(e) at any time the lessor or a person connected with him will, or may in certain circumstances, become entitled to receive from the lessee or any other person a payment, other than a payment of insurance moneys, which is of an amount determined before the expiry of the lease and which is referable to a value of the machinery or plant at or after that expiry (whether or not the payment relates to a disposal of the machinery or plant).

(5) Where a first year allowance, a balancing allowance or a writing-down allowance has been made in respect of expenditure incurred in providing machinery or plant and, at any time in the requisite period, an event occurs such that, by virtue of subsection (4) above, there is no right to that allowance, an amount equal to any such allowance which has previously been given (less any excess reliefs previously recovered by the operation of section 66 of the [1980 c. 48.] Finance Act 1980) shall, in relation to the person to whom the machinery or plant belongs immediately before the occurrence of that event, be treated as if it were a balancing charge to be made on him for the chargeable period in which, or in the basis period for which, the machinery or plant is used at the time that event occurs.

(6) Subsections (3) and (4) of section 66 of the Finance Act 1980 apply in relation to the allowances mentioned in subsection (5) above as they apply in relation to the allowances mentioned in subsection (2) of that section.

(7) In subsection (1) above " short-term leasing " has the same meaning as in subsection (2)(b) of section 64 of the Finance Act 1980, and in subsection (3) of that section (which defines that expression) at the beginning of sub-paragraph (ii) of paragraph (b), there shall be inserted the words " subject to subsection (3A) below " and at the end of that subsection there shall be added—

“(3A) In a case where the requisite period exceeds four years the reference in subsection (3)(b)(ii) above to that period shall be construed as a reference to any period of four consecutive years which falls within the requisite period.”

(8) The provisions of Schedule 11 to this Act shall have effect for supplementing the preceding provisions of this section.

(9) In subsections (1) and (5) above " the requisite period " has the same meaning as, in a case where subsection (3) above applies, it has in sections 64 to 68 of the Finance Act 1980 ; and section 73 of that Act (interpretation), with the exception of subsection (4) thereof, has effect in relation to the preceding provisions of this section and the provisions of Schedule 11 to this Act—

(a) as if those provisions were comprised in the foregoing provisions of Chapter II of Part III of that Act; and

(b) as if the reference in subsection (1) of that section to section 72 of that Act included a reference to subsection (10) below.

(10) Subject to subsection (11) below, this section applies to expenditure incurred on or after 10th March 1982 unless—

(a) the expenditure consists of the payment of sums payable under a contract entered into before that date by the person incurring the expenditure ; or

(b) the expenditure consists of the payment of sums payable under a contract entered into not later than 31st March 1984 and the conditions in subsection (12) below are fulfilled;

and, in either case, the machinery or plant concerned is brought into use not later than 31st March 1985.

(11) In its application to subsections (4) to (6) above, subsection (10) above has effect as if for the references to 10th March 1982 there were substituted references to 23rd June 1982.

(12) The conditions referred to in paragraph (b) of subsection (10) above are—

(a) that the expenditure referred to in that paragraph is incurred in fulfilment of arrangements (not necessarily amounting to contractual obligations) under which the person incurring the expenditure (in this subsection referred to as " the lessor ") would lease the machinery or plant in question to another person (in this subsection referred to as " the lessee "); and

(b) that those arrangements were in existence on 10th March 1982 and are evidenced by writing dating from a time before that date ; and

(c) that, in reliance upon the arrangements and before 10th March 1982, the lessee had entered into a contract with a third party (in this subsection referred to as " the supplier ") to incur expenditure on the provision of the machinery or plant in question ; and

(d) that, pursuant to the arrangements.—

(i) the obligations of the lessee under the contract referred to in paragraph (c) above are, before 31st March 1984, either taken over by the lessor or discharged on the lessor entering into a new contract with the supplier ; or

(ii) the lessee purchases the machinery or plant in question and transfers it to the lessor before 8th July 1982; and

(e) that, on or before 31st March 1984, the lessor enters into a contract to lease the machinery or plant to the lessee; and

(f) that, disregarding any use before 8th July 1982, the machinery or plant in question is not brought into use by the lessee before it is leased to him by the lessor; and

(g) that the lessor and the lessee are not connected persons and neither of them is connected with the supplier;

and section 533 of the Taxes Act (connected persons) applies for the purposes of this section.

71 Restriction on first-year allowances in respect of ships and aircraft let on charter

(1) In subsection (5) of section 64 of the [1980 c. 48.] Finance Act 1980 (first-year allowances to be available in respect of ships and aircraft let out on certain charters) after the words " subsection (2) above " there shall be inserted the words " but subject to subsection (6A) below ".

(2) At the end of subsection (6) of that section there shall be inserted the following subsection: —

“(6A) Subsection (5) above does not apply if the main object, or one of the main objects, of the letting of the ship or aircraft on charter, or of a series of transactions of which the letting on charter was one, or of any of the transactions in such a series was to obtain a first-year allowance in respect of expenditure incurred on the provision of the ship or aircraft, whether by the person referred to in subsection (5) (a) above or some other person.”

(3) This section applies in relation to expenditure incurred on or after 10th March 1982 unless—

(a) the expenditure consists of the payment of sums payable under a contract entered into before that date by the person incurring the expenditure ; and

(b) the ship or aircraft concerned is brought into use not later than 31st March 1984.

72 Expenditure on production and acquisition of films etc.

(1) Expenditure which—

(a) is incurred on or after 10th March 1982 on the production or acquisition of a film, tape or disc, and

(b) would, apart from this subsection, constitute capital expenditure on the provision of machinery or plant for the purposes of Chapter I of Part III of the [1971 c. 68.] Finance Act 1971 (first-year and other allowances in respect of machinery and plant),

shall be regarded for the purposes of the Tax Acts as expenditure of a revenue nature unless it is expenditure falling within subsection (7) below.

(2) In this section—

(a) any reference to a film is (except where, in subsection (8) below, the context otherwise requires) a reference to an original master negative of the film and its soundtrack (if any);

(b) any reference to a tape is a reference to an original master film tape or original master audio tape ; and

(c) any reference to a disc is a reference to an original master film disc or original master audio disc;

and any reference to the acquisition of a film, tape or disc includes a reference to the acquisition of any description of rights in a film, tape or disc.

(3) Subject to the following provisions of this section, in computing the profits or gains accruing to any person from a trade or business which consists of or includes the exploitation of a film, tape or disc, expenditure which—

(a) is incurred on or after 10th March 1982 on the production or acquisition of a film, tape or disc, and

(b) is expenditure of a revenue nature (whether by virtue of subsection (1) above or otherwise),

shall be allocated to relevant periods in accordance with subsection (4) below ; and in this subsection and subsection (4) below " relevant period " means a period for which the accounts of the trade or business concerned are made up or, if those accounts are not made up for any period, a period the profits or gains of which are taken into account in assessing the income of the trade or business for any chargeable period.

(4) The amount of expenditure falling within subsection (3) above which falls to be allocated to any relevant period shall be such as is just and reasonable, having regard to—

(a) the amount of that expenditure which remains un allocated at the beginning of that period;

(b) the proportion which the estimated value of the film, tape or disc which is realised in that period (whether by way of income or otherwise) bears to the aggregate of the value so realised and the estimated remaining value of the film, tape or disc at the end of that period ; and

(c) the need to bring the whole of the expenditure falling within subsection (3) above into account over the time during which the value of the film, tape or disc is expected to be realised.

(5) Subsections (3) and (4) above do not apply to the profits or gains of a trade in which the film, tape or disc concerned constitutes trading stock, as defined in section 137(4) of the Taxes Act.

(6) In a case where any expenditure on the production or acquisition of a film, tape or disc is expenditure to which subsection (1) above applies, sums received from the disposal of that film, tape of disc shall be regarded for the purposes of the Tax Acts as receipts of a revenue nature (if they would not be so regarded apart from this subsection); and the reference in this subsection to sums received from the disposal of any film, tape or disc shall be construed as including—

(a) sums received from the disposal of any interest or right in or over the film, tape or disc, including an interest or right created by the disposal; and

(b) insurance or compensation moneys and other moneys of a like nature which are derived from the film, tape or disc.

(7) The preceding provisions of this section do not apply to expenditure which is incurred by any person on or before 31st March 1984 if it consists of the payment of sums payable under a contract entered into by him before 10th March 1982 or it is incurred—

(a) by a person who carries on a trade or business which consists of or includes the exploitation of films, tapes or discs; and

(b) on the production or acquisition of a film, tape or disc which is certified by the Secretary of State for the purposes of this section as a qualifying film, tape or disc and the value of which is expected to be realisable over a period of not less than two years.

(8) The Secretary of State shall not certify a film, tape or disc as a qualifying film, tape or disc for the purposes of this section unless he is satisfied that it is the master negative, master tape or master disc of a film which, in his opinion.—

(a) is an eligible film for the purposes of regulations made or having effect as if made under section 6 of the [1981 c. 16.] Film Levy Finance Act 1981 (payments by the British Film Fund Agency to the makers of British films) and in force immediately before the passing of this Act; or

(b) would be such an eligible film if it were not a television film within the meaning of those regulations.

(9) In this section " expenditure of a revenue nature " means expenditure which, if it were incurred in the course of a trade the profits or gains of which are chargeable to tax under Case i of Schedule D, would be taken into account for the purpose of computing the profits, gains or losses of the trade; and " receipts of a revenue nature" means receipts which, if they were receipts of such a trade, would be taken into account for that purpose.

73 Industrial buildings allowance: very small workshops

(1) Chapter I of Part I of the [1968 c. 3.] Capital Allowances Act 1968 (industrial buildings allowances) shall apply with the modifications specified in paragraphs 1 to 3 of Schedule 13 to the [1980 c. 48.] Finance Act 1980 in relation to capital expenditure on the construction of an industrial building to which this section applies if the expenditure is incurred after 26th March 1983 and before 27th March 1985.

(2) This section applies to an industrial building if the gross internal floor space of the whole building will not exceed 1,250 square feet.

(3) Subsections (3) to (6) of section 75 of the [1980 c. 48.] Finance Act 1980 (small workshops allowance) shall apply for the purposes of this section as they apply for the purposes of that section and accordingly—

(a) in subsection (3) the reference to subsection (2) of that section shall be construed as including a reference to subsection (2) of this section ; and

(b) in subsections (4) and (5) the references to subsection (1) of that section shall be construed as including a reference to subsection (1) of this section.

(4) The Tax Acts shall have effect as if this section were contained in Chapter I of Part I of the said Act of 1968.

74 Industrial buildings allowance: licensees

(1) In section 1 of the [1968 c. 3.] Capital Allowances Act 1968 (initial allowances) the following subsection shall be inserted after subsection (1)—

“(1A) The reference in subsection (1) above to the occupation of a building or structure for the purposes of a trade carried on by the person who incurred the capital expenditure on that building or structure shall include a reference to the use of that building or structure for the purposes of a trade carried on by a licensee of that person or of a lessee of that person.”

(2) Section 6 of that Act (method of making allowances and charges) shall apply where the building or structure in question is used by a licensee of the person entitled to the relevant interest as if that interest were subject to a lease.

(3) In section 7 of that Act (definition of " industrial building or structure ") the following subsection shall be inserted after subsection (3)—

“(3A) Where a building or structure is used by more than one licensee of the same person that building or structure shall not be an industrial building or structure unless each of the licensees uses the building or that part of it to which his licence relates for the purposes of a trade which falls within subsection (1) above.”

(4) Subsections (1) and (3) above shall apply in relation to licences granted on or after 10th March 1982.

75 Industrial buildings allowance: maintenance of goods etc.

(1) In section 7 of the [1968 c. 3.] Capital Allowances Act 1968 (definition of " industrial building or structure ") the following subsection shall be inserted after subsection (2)—

“(2A) The reference in paragraph (e) of subsection (1) above to the subjection of goods or materials to any process shall include a reference to the maintaining or repairing of any goods or materials but, notwithstanding subsection (2) above, paragraph (e) shall not apply to the maintenance or repair by any person of goods or materials employed by that person in any trade or undertaking unless that trade or undertaking itself falls within any of the paragraphs of that subsection (including paragraph (e)).”

(2) In subsection (3) of that section (retail shops etc. not to constitute industrial buildings or structures) for the words " subsection (1) or subsection (2)" there shall be substituted the words " the preceding provisions ".

(3) This section shall be deemed to have come into force on 10th March 1982.

76 Allowances for dwelling houses let on assured tenancies

(1) The provisions of Schedule 12 to this Act shall have effect to provide for reliefs in respect of expenditure incurred on the construction of buildings consisting of or including dwelling-houses let on assured and certain other tenancies.

(2) Schedule 12 to this Act has effect only where the expenditure concerned is incurred on or after 10th March 1982 and before 1st April 1987 or is deemed to have been so incurred by virtue of paragraph 8 of that Schedule.

77 Teletext receivers and teletext and viewdata adaptors

(1) Paragraph 7 of Schedule 12 to the [1980 c. 48.] Finance Act 1980 (transitional period for 100 per cent, first year allowances for television sets) shall be amended in accordance with the following provisions of this section.

(2) In sub-paragraph (2) (definition of "the transitional period ") in paragraph (a) after the words " other than " there shall be inserted the words " a teletext receiver or " and at the end of paragraph (a) there shall be inserted: —

“(aa) in relation to expenditure on the provision of a teletext receiver, the period of five years beginning with that date”.

(3) In sub-paragraph (3) (definition of "viewdata receiver") after the words " television set" in the first place where they occur, there shall be inserted the words " which is not a teletext receiver but which is " and the words from "and a television set" to the end of the sub-paragraph shall be omitted.

(4) After sub-paragraph (3) there shall be inserted the following sub-paragraphs:—

“(4) In this Part of this Schedule " a teletext receiver " means a television set—

(a) which is constructed for receiving teletext transmissions, that is to say, transmissions intended for general reception and consisting of a succession of visual displays (with or without accompanying sound) each capable of being selected and held for separate viewing or other use; and

(b) which is not also constructed for displaying information received as mentioned in sub-paragraph (3) above.

(5) In relation to expenditure incurred after 9th March 1982—

(a) this Part of this Schedule, other than sub-paragraph (6) below, shall have effect as if any reference to a television set included a reference to a teletext adaptor or a viewdata adaptor; and

(b) sub-paragraph (2) above shall have effect as if any reference to a teletext receiver included a reference to a teletext adaptor and as if any reference to a viewdata receiver included a reference to a viewdata adaptor.

(6) In this Part of this Schedule

(a) " teletext adaptor " means a device external to a television set which, after it is connected to that television set, allows the set to display transmissions in the same manner as a teletext receiver; and

(b) " viewdata adaptor" means a device external to a television set which, after it is connected to that television set, allows the set to display information received in the same manner as a viewdata receiver.”

78 Extension of section 515 relief to Case V of Schedule D

(1) In section 515(1) of the Taxes Act (postponement of capital allowances to secure double taxation relief) for the words " tax in respect of a trade under Case I of Schedule D " there shall be substituted the words " tax under Schedule D in respect of a trade ".

(2) This section applies in relation to claims made on or after 6th April 1982.

79 Capital allowances and stock relief

(1) This section applies in any case where a person is entitled to an allowance or relief for a year of assessment and—

(a) he and the inspector have come to an agreement, in writing, as to the extent to which the allowance or relief is to be given effect in that year (whether by deduction from profits or gains or by discharge or repayment of tax, or both); and

(b) no assessment giving effect to the allowance or relief is made for that year.

(2) In a case to which this section applies the allowance or relief shall be taken to have been given effect in the year of assessment in question, as if an assessment had been made, to the extent set out in the agreement mentioned in subsection (1) above.

(3) In this section—

• " allowance " means an allowance to which section 70 or 71 of the [1968 c. 3.] Capital Allowances Act 1968 applies (income tax allowances in taxing a trade); and

• " relief " means a relief to which Part II of Schedule 9 to the [1981 c. 35.] Finance Act 1981 applies (income tax: stock relief).

(4) This section has effect in relation to agreements made on or after 6th April 1982.