9

Section 532 of the Capital Allowances Act (general rule excluding contributions) shall apply for the purposes of this section as it applies for the purposes of that Act.

b

any allowance to be given effect under Part 2 of the Capital Allowances Act in respect of a special leasing of plant or machinery were an allowance to be given effect in calculating the profits of that trade.

384ARestriction of set-off of allowances against general income

1

Relief shall not be given to an individual under sections 380 and 381 by reference to a first-year allowance under Part 2 of the Capital Allowances Act (plant and machinery allowances) in the circumstances specified in subsection (2) or (4) below.

2

The circumstances are that the allowance is in respect of expenditure incurred on the provision of plant or machinery for leasing in the course of a qualifying activity and—

a

at the time when the expenditure was incurred, the qualifying activity was carried on by the individual in question in partnership with a company (with or without other partners), or

b

a scheme has been effected or arrangements have been made (whether before or after that time) with a view to the qualifying activity being so carried on by that individual.

3

For the purposes of subsection (2) above letting a ship on charter shall be regarded as leasing it if, apart from this subsection, it would not be so regarded.

4

The circumstances are that the allowance is made in connection with—

a

a qualifying activity which at the time when the expenditure was incurred was carried on by the individual in partnership or which has subsequently been carried on by him in partnership or transferred to a person who was connected with him, or

b

an asset which after that time has been transferred by the individual to a person who was connected with him or, at a price lower than its market value, to any other person,

and the condition in subsection (5) below is met.

5

The condition is that a scheme has been effected or arrangements have been made (whether before or after the time referred to in subsection (4) above) such that the sole or main benefit that might be expected to accrue to the individual from the transaction under which the expenditure was incurred was the obtaining of a reduction in tax liability by means of relief under sections 380 and 381.

6

Where relief has been given in circumstances in which subsection (1) applies it shall be withdrawn by the making of an assessment under Case VI of Schedule D.

7

Section 839 (how to tell whether persons are connected) applies for the purposes of subsection (4) above.

8

Expressions used in this section and in Part 2 of the Capital Allowances Act have the same meaning as in that Part.

532Application of Capital Allowances Act

The Tax Acts have effect as if sections 524 to 529 and 531, this section and section 533 were contained in the Capital Allowances Act.

578AExpenditure on car hire

1

This section provides for a reduction in the amounts—

a

allowable as deductions in computing profits chargeable to tax under Case I or II of Schedule D,

b

which can be included as expenses of management of an investment company (as defined by section 130), or

c

allowable as deductions from emoluments chargeable to tax under Schedule E,

for expenditure on the hiring of a car to which this section applies.

2

This section applies to the hiring of a car—

a

which is not a qualifying hire car, and

b

the retail price of which when new exceeds £12,000.

“Car” and “qualifying hire car” are defined by section 578B.

3

The amount which would, apart from this section, be allowable or capable of being included must be reduced by multiplying it by the fraction—

$\genfrac{}{}{0.1ex}{}{\pounds 12\text{,}000+\mathrm{P}}{\mathrm{2P}}$

where P is the retail price of the car when new.

4

If an amount has been reduced under subsection (3) and subsequently—

a

there is a rebate (however described) of the rentals, or

b

there occurs in connection with the rentals a transaction that falls within section 94 (debts deducted and subsequently released),

the amount otherwise taxable in respect of the rebate or transaction must be reduced by multiplying it by the fraction in subsection (3) above.

578BExpenditure on car hire: supplementary

1

In section 578A “car” means a mechanically propelled road vehicle other than one—

a

of a construction primarily suited for the conveyance of goods or burden of any description, or

b

of a type not commonly used as a private vehicle and unsuitable for such use.

References to a car accordingly include a motor cycle.

2

For the purposes of section 578A, a car is a qualifying hire car if—

a

it is hired under a hire-purchase agreement (within the meaning of section 784(6)) under which there is an option to purchase exercisable on the payment of a sum equal to not more than 1 per cent. of the retail price of the car when new, or

b

it is a qualifying hire car for the purposes of Part 2 of the Capital Allowances Act (under section 82 of that Act).

3

In section 578A and this section “new” means unused and not second-hand.

4

The power under section 74(4) of the Capital Allowances Act to increase or further increase the sums of money specified in Chapter 8 of Part 2 of that Act includes the power to increase or further increase the sum of money specified in section 578A(2)(b) or (3).

c

any allowance given effect under section 258 or 479 of the Capital Allowances Act;