186A Fixtures on which a business premises renovation allowance has been made
31.There is a general rule in section 9 of CAA that if any person has claimed an allowance under any Part other than Part 2, then no other person is able to claim a fixture allowance under Part 2. The general rule is relaxed in the case of fixtures on which industrial buildings allowances, or research and development allowances, have been claimed. New section 186A introduces a similar relaxation in relation to business premises renovation allowances (BPRA), ensuring that where a property which has qualified for BPRA, under Part 3A, is sold then the new owner can claim allowances under Part 2, to the extent that the original BPRA qualifying expenditure was not relieved but only to that extent. In all other cases no allowances are available to the new owner. The drafting of new section 186A follows section 186 in most material respects. The only significant change from the consultation draft of the legislation published on 6 December 2011 is that the definition of ‘R’ has been changed as, unlike the IBA code, Part 3A does not reset ‘RQE’ following a balancing event (because there is no need to do so). ‘R’ is now defined as the qualifying expenditure incurred by the past owner on the fixture less the ‘net Part 3A allowances’ in respect of that asset. ‘net Part 3A allowances’ are defined as the total of any allowances made under Part 3A (that is, any initial allowance and any writing-down allowance) less the total of any balancing charges made under Part 3A in relation to that expenditure.
32.Paragraphs 7 to 10 make minor consequential amendments to sections 9, 57, 198 and 199 of CAA to include references to the amendments in respect of BPRA and the new section 186A.
33.Paragraph 11 explains that the amendments made by paragraphs 1 to 5 have effect:
for income tax purposes, in relation to new expenditure incurred on or after 6 April 2012, and
for corporation tax purposes, in relation to new expenditure incurred on or after 1 April 2012
34.Paragraph 12 explains that the amendments made in relation to BPRA by paragraphs 6 to 10 have effect:
for income tax purposes, in relation to balancing events which occur on or after 6 April 2012, and
for corporation tax purposes, in relation to balancing events which occur on or after 1 April 2012
35.Paragraph 13(1) deals with expenditure of a past owner where the period of ownership was entirely before 1/6 April 2012 and provides that neither the pooling requirement nor requirements to fix formally the value of fixtures apply in relation to such a period of ownership.
36.Paragraph 13(2) disapplies the pooling requirement in relation to the new section 187A if the period for which the plant or machinery is treated as having been owned by the past owner ends no later than the end of the two years beginning with the commencement date, as defined in paragraph 13(3). This is a change from the consultation draft of the legislation to cater for the case of a sale in the transitional period to a non-business owner, who is not entitled to claim allowances, and who would, therefore, be unable to pool any hitherto un-pooled qualifying expenditure on fixtures. In effect, this change disapplies the pooling requirement for an extended period, where the period of ownership of a past owner (who was entitled to claim) ends no later than a period ending on 5 April 2014 (for income tax purposes) or 31 March 2014 (for corporation tax purposes).
37.Paragraph 13(3) gives the meaning of commencement date as used in paragraph 13(1) and the transitional period as used in paragraph 13(2).
The commencement date means
for income tax purposes, 6 April 2012, and
for corporation tax purposes, 1 April 2012
The transitional period means
for income tax purposes, the period beginning with the commencement date and ending with 5 April 2014, and
for corporation tax purposes, the period beginning with the commencement date and ending with 31 March 2014.
