Part 3 Industrial buildings allowances

Chapter 4 Qualifying expenditure

Part of expenditure within time limit for qualifying enterprise zone expenditure

302 Qualifying enterprise zone expenditure where section 295 or 296 applies

(1) This section applies if—

(a) expenditure is incurred on the construction of an EZ building,

(b) only a part of the expenditure is incurred within the time limit, and

(c) the circumstances are as described in—

(i) section 295(1) (purchase of unused building where developer not involved), or

(ii) section 296(1) (purchase of building which has been sold unused by developer).

(2) Only a part of the qualifying expenditure given by section 295(2) or 296(2) or (3) (as the case may be) is qualifying enterprise zone expenditure.

(3) The part of the qualifying expenditure that is qualifying enterprise zone expenditure is—

where—

• QE is the qualifying expenditure,

• E is the part of the expenditure on the construction of the EZ building that is incurred within the time limit, and

• T is the total expenditure on the construction of the building.

303 Purchase of building within 2 years of first use

(1) This section applies if—

(a) expenditure is incurred on the construction of an EZ building,

(b) only a part of the expenditure is incurred within the time limit,

(c) the relevant interest in the building is sold—

(i) after the building has been used, but

(ii) within the period of 2 years beginning with the date on which the building was first used, and

(d) that sale (“the relevant sale”) is the first sale in that period after the building has been used.

(2) If this section applies—

(a) any balancing adjustment which falls to be made on the occasion of the relevant sale is to be made, and

(b) the residue of qualifying expenditure immediately after the relevant sale is to be disregarded for the purposes of this Part.

(3) If a capital sum is paid by the purchaser for the relevant interest on the relevant sale—

(a) the purchaser is to be treated as having incurred qualifying expenditure—

(i) part of which is qualifying enterprise zone expenditure (“Z”), and

(ii) part of which is not (“N”), and

(b) in relation to that qualifying expenditure, this Part applies as if the building had not been used before the date of the relevant sale.

(4) Unless section 304 (cases where developer involved) applies—

and

N = L - Z

where—

• L is the lesser of—

  (a)

  the capital sum paid for the relevant interest on the relevant sale, and

  (b)

  the expenditure incurred on the construction of the building,

• E is the part of the expenditure on the construction of the EZ building that is incurred within the time limit, and

• T is the total expenditure on the construction of the building.

(5) Any qualifying expenditure arising under this section or section 304 is to be treated as incurred when the capital sum on the relevant sale became payable.

304 Application of section 303 where developer involved

(1) This section applies if section 303 applies but—

(a) the expenditure on the construction of the building was incurred by a developer, and

(b) the relevant interest in the building has been sold by the developer in the course of the development trade;

and in this section Z, N, E and T have the same meaning as in section 303.

(2) If the sale by the developer is the relevant sale—

and

where—

• C is the capital sum paid for the relevant interest by the purchaser, and

• L is the lesser of—

  (a)

  the capital sum paid for the relevant interest on the relevant sale, and

  (b)

  the expenditure incurred on the construction of the building.

(3) If the sale by the developer is not the relevant sale—

and

N = D - Z

where D is the lesser of—

(a)

the price paid for the relevant interest on its sale by the developer, and

(b)

the capital sum paid for the relevant interest on the relevant sale.