Finance Act 1947

24Relief for capital expenditure on rehabilitation.

(1)Subject to the provisions of this section, where a person carrying on a trade incurs, whether before or after the passing of this Act but before the end of the year nineteen hundred and forty-seven, rehabilitation costs in connection with the trade, those costs may be deducted as an expense in computing the profits or gains of the trade for the purposes of income tax:

Provided that if the person carrying on the trade produces to the Commissioners of Inland Revenue before the end of March, nineteen hundred and forty-eight, particulars of work required to be done, as at the thirty-first day of December, nineteen hundred and forty-six, and satisfies them that it was not possible for that work to be done before the end of the year nineteen hundred and forty-seven, the said Commissioners may direct that, in relation to any rehabilitation costs incurred in doing that work, this subsection shall have effect as if for the first reference therein to the end of the year nineteen hundred and forty-seven there were substituted a reference to the end of the year nineteen hundred and forty-eight or, if the circumstances so require, to such later date as the said Commissioners may allow, being a date not later than the end of the year nineteen hundred and forty-nine.

(2)Where the excess in respect of which an exceptional depreciation allowance falls to be made for any year of assessment in charging the profits or gains of a trade has been increased owing to any rehabilitation costs having been treated as part of the net cost of the provision of any building, machinery or plant, any deduction allowable under this section in respect of those costs in computing the profits or gains of the trade (whether for the same or any other year of assessment) shall be reduced by the amount of the increase ; and where any such excess would have been diminished if the work which is the subject of any rehabilitation costs incurred in connection with the trade after the thirty-first day of December, nineteen hundred and forty-six, had been completed on that day, any deduction allowable under this section in respect of those costs in computing the profits or gains of the trade (whether for the same or any other year of assessment) shall be reduced by the amount of the diminution.

(3)Where a deduction allowed under this section in computing the profits or gains of a trade for any year of assessment is in respect of rehabilitation costs incurred in the provision, renewal, improvement, reinstatement or replacement of any machinery or plant, any deduction made in respect of that machinery or plant under Rule 6 of the Rules applicable to Cases I and II of Schedule D in charging the profits or gains of the trade (whether for the same or any other year of assessment) and any deduction made in respect of the machinery or plant under Rule 7 of those Rules in estimating the profits or gains of the trade (whether for the same or any other year of assessment) shall be computed as if those costs had not been incurred.

(4)In this section, the expression " rehabilitation costs" means—

(a)expenditure on the removal of works designed to afford protection from hostile attack;

(b)where the trade was, as a consequence of the war, removed in whole or in part to a different place, expenditure on again removing the trade or that part thereof back to the place where it was carried on before the first-mentioned removal, or, where the trade or that part thereof is not removed back to that place, expenditure on removing it to some other place up to the amount which would have been incurred in removing it back to that place ;

(c)where any buildings, plant, machinery or other physical assets held for the purposes of the trade were, either as respects lay-out or otherwise, altered so as to adapt them to conditions prevailing as a result of the war, any expenditure incurred on again altering the assets so as to re-adapt them to peace-time requirements, except so far as that expenditure represents an improvement of the character or condition of the assets as compared with their character and condition before the first mentioned alteration,

the expression " exceptional depreciation allowance " means an allowance made under section nineteen of the [4 & 5 Geo. 6. c. 30.] Finance Act, 1941, and any reference in this section to an allowance made or deduction allowed includes a reference to an allowance or deduction which would be made or allowed but for an insufficiency of profits or gains against which to make it.

(5)Nothing in this section applies in relation—

(a)to any rehabilitation costs which, apart from the provisions of this section, would be deductible in computing the profits or gains of the trade in question for the purposes of income tax ; or

(b)to so much of any rehabilitation costs as has been or is to be met directly or indirectly by the Crown or by any government or public or local authority, whether in the United Kingdom or elsewhere, or by any person other than the person carrying on the trade in question,

and references in this section to rehabilitation costs shall be construed accordingly.

(6)This section shall have effect as respects the year 1939-40 and subsequent years of assessment and all necessary adjustments of any assessments made before the passing of this Act, for any year of assessment, shall be made accordingly; but it shall not apply for the purposes of excess profits tax.