Finance Act 1982

138 Provisions supplementary to section 137

(1) The provisions of this section apply where—

(a) expenditure incurred by any person in relation to an asset in any relevant period (in this section referred to as " the initial period ") has been or is to be met by a regional development grant; and

(b) notwithstanding the provisions of section 137 above, in determining that person's liability to income tax or corporation tax for the initial period the whole or some part of that expenditure falls to be taken into account under Chapter I of Part I, or under Part II, of the [1968 c. 3.] Capital Allowances Act 1968 (allowances in respect of industrial buildings and structures and scientific research) or Chapter I of Part III of the [1971 c. 68.] Finance Act 1971 (allowances in respect of machinery and plant); and

(c) in a relevant period subsequent to the initial period, either expenditure on the asset becomes allowable under section 3 or section 4 of the principal Act or the proportion of any such expenditure which is so allowable is different as compared with the initial period;

and in the following provisions of this section, the subsequent relevant period referred to in paragraph (c) above is referred to as " the adjustment period ".

(2) Where this section applies, there shall be redetermined for the purposes of this section the amount of the expenditure referred to in paragraph (a) of subsection (1) above which would have been taken into account as mentioned in paragraph (b) of that subsection if the circumstances referred to in paragraph (c) of that subsection had existed in the initial period; and according to whether the amount as so redetermined is greater or less than the amount actually taken into account as mentioned in subsection (1)(b) above, the difference is in the following provisions of this section referred to as the increase or the reduction in the allowance.

(3) If there is an increase in the allowance, then, for the purposes of the provisions referred to in subsection (1)(b) above, an amount of capital expenditure equal to the increase shall be deemed to have been incurred by the person concerned in the adjustment period on an extension of or addition to the asset referred to in subsection (1)(a) above.

(4) If there is a reduction in the allowance, then, for the purpose of determining the liability to income tax or corporation tax of the person concerned, he shall be treated as having received in the adjustment period, as income of the trade in connection with which the expenditure referred to in subsection (1)(a) above was incurred, a sum equal to the amount of the reduction in the allowance.

(5) In this section " relevant period " means an accounting period of a company or a year of assessment.