Capital Allowances Act 1990

119Transitional provisions relating to old expenditure

(1)Except as provided by subsections (2) to (5) below, this Part does not apply in relation to old expenditure and in this section—

• “old expenditure” means expenditure which is not new expenditure;

• “new expenditure” means, subject to the following provisions of this section, expenditure incurred on or after 1st April 1986; and

• “the relevant day” means 1st April 1986.

(2)If—

(a)immediately before the relevant day, no allowance had been made under Chapter III of Part I of the 1968 Act in respect of old expenditure incurred before that day on mineral exploration and access; and

(b)after that day and before mineral exploration and access ceases at the source in question, the person by whom the expenditure was incurred began or begins to carry on a trade of mineral extraction,

then section 106 or 107, as the case may be, shall (or shall continue to) apply as if the expenditure were new expenditure.

In this subsection “source” has the same meaning as it had in Schedule 14 to the 1986 Act.

(3)For the purposes of this Part—

(a)expenditure which by virtue of any provision of Schedule 14 to the 1986 Act was treated immediately before the coming into force of this Act as new expenditure incurred on the relevant day for any purpose or purposes shall continue to be so treated;

(b)any allowances treated as having been made under Schedule 13 of that Act shall continue to be so treated;

(c)any amount treated as qualifying expenditure for the purposes of that Schedule shall continue to be so treated; and

(d)in relation to any expenditure to which paragraph 6(4)(a) of Schedule 14 to the 1986 Act applied, section 112 shall not apply (so that no deduction shall be made from the amount of any disposal receipt by reference to the undeveloped market value of the land in question);

but, in the case of expenditure incurred in the acquisition of a mineral asset, nothing in paragraph (c) above shall affect the time as at which under section 110 the undeveloped market value of an interest is to be determined.

(4)In any case where—

(a)by virtue of any provision of this section the whole or any part of the outstanding balance (within the meaning of paragraph 1 of Schedule 14 to the 1986 Act) of an item of old expenditure is treated for the purposes of this Part as qualifying expenditure, and

(b)a balancing charge falls to be made under section 100 in respect of that expenditure,

then, in determining the amount on which that charge falls to be made, subsection (2)(b) of that section shall have effect as if it referred not only to allowances made as mentioned in subsection (1)(c) of that section but also, subject to subsection (5) below, to allowances made in respect of the item under Chapter III of Part I of the 1968 Act.

(5)Where the qualifying expenditure in respect of which a balancing charge falls to be made represents part only of the outstanding balance of an item of old expenditure, the reference in subsection (4) above to allowances made in respect of that item shall be construed as a reference to such part of those allowances as it is just and reasonable to apportion to that part of the balance (having regard to any apportionment made under paragraph 3(2) of Schedule 14 to the 1986 Act).

(6)In this section “the 1986 Act” means the [1986 c. 41.] Finance Act 1986.