[F1Part 3U.K. Industrial buildings allowances

Chapter 11U.K. Giving effect to allowances and charges

353 Lessors and licensorsU.K.

(1)This section applies if—

(a)a person is entitled or liable to an allowance or charge for a chargeable period (“the relevant period”), but

(b)his interest in the building in question is or was subject to a lease or a licence at the relevant time.

(2)If the person’s interest in the building is an asset of [F2a UK property businessF3... ] carried on by him at any time in the relevant period, the allowance or charge is to be given effect in calculating the profits of that business for the relevant period, by treating—

(a)the allowance as an expense of that business, and

(b)the charge as a receipt of that business.

(3)If the person’s interest in the building is an asset of an overseas property business carried on by him at any time in the relevant period, the allowance or charge is to be given effect in calculating the profits of the overseas property business for the relevant period, by treating—

(a)the allowance as an expense of that business, and

(b)the charge as a receipt of that business.

[F4(3A) If the person is within the charge to income tax in respect of the allowance or charge and his interest in the building is not an asset of any property business carried on by him at any time in the relevant period, the allowance or charge is to be given effect by treating him as if he had been carrying on a UK property business in that period and as if—

(a)the allowance were an expense of that business, and

(b)the charge were a receipt of that business.]

(4)If [F5the person is a company within the charge to corporation tax in respect of the allowance or charge and its] interest in the building is not an asset of any property business carried on by [F6it] at any time in the relevant period, the allowance or charge is to be given effect by treating [F7the company] as if [F8it] had been carrying on a [F9UK property business] in that period and as if—

(a)the allowance were an expense of that business, and

(b)the charge were a receipt of that business.

(5)In subsection (1) “the relevant time” means—

(a)in relation to an initial allowance, the time when the expenditure was incurred or any subsequent time before the building is used for any purpose;

(b)in relation to a writing-down allowance, the end of the relevant period;

(c)in relation to a balancing allowance or balancing charge, the time immediately before the event giving rise to the allowance or charge.]