Finance Act 1997

Apportionment of expenditure by election

6(1)In Chapter VI of Part II, after the section 59A inserted by paragraph 5 above there shall be inserted the following sections—

“59BElection to use alternative apportionment

(1)This section applies where, in a case in which a disposal value of a fixture is required to be brought into account by the former owner, the price referred to in subsection (1) of section 59 falls to be determined in accordance with subsection (2) or (3) of that section.

(2)Subject to sections 56C, 56D and 59A and to the following provisions of this section, the purchaser and the former owner may jointly, by an election under this section, fix the amount which, for all the purposes of this Part, is to be taken—

(a)in a case to which subsection (2) of section 59 applies, to be the portion of the sale price referred to in that subsection; or

(b)in a case to which subsection (3) of that section applies, to be the portion of the capital sum referred to in section 55(1)(c) that falls to be treated as expenditure by the purchaser on the provision of the fixture.

(3)The amount fixed by an election under this section shall not exceed either of the following amounts, that is to say—

(a)the amount of the capital expenditure which was taken for the purposes of this Part to have been incurred by the former owner on the provision of the fixture or of the machinery or plant which became the fixture; and

(b)the actual amount of the sale price or capital sum referred to in section 59(2) or, as the case may be, section 55(1)(c).

(4)Where the portion of any amount which is to be taken as attributable to the provision of a fixture is fixed by an election under this section—

(a)the remainder (if any) of that amount shall be taken for the purposes of this Act to be expenditure attributable to the acquisition of the property which is not the fixture but is acquired for that amount;

(b)if there is no remainder, the expenditure so attributable shall be taken for those purposes to be nil.

(5)An apportionment by virtue of an election under this section shall have effect in place of any apportionment that would otherwise be made under section 150.

(6)In this section—

• “the former owner” shall be construed in accordance with subsection (1) of section 59; and

• “the purchaser” means the purchaser or lessee referred to in subsection (2) or, as the case may be, subsection (3) of that section.

59CElections under section 59B: supplemental

(1)A section 59B election must be made by notice given to an officer of the Board.

(2)A notice containing a section 59B election (in addition to specifying the amount fixed by the election) must contain the following information—

(a)the name of each of the persons making the election;

(b)information sufficient to identify the machinery or plant;

(c)information sufficient to identify the relevant land;

(d)particulars of the interest acquired by the purchaser or, as the case may be, of the lease granted to him; and

(e)the tax district references of each of the persons making the election.

(3)The amount specified as the amount fixed by a section 59B election must be quantified at the time when the election is made; but if, as a result of circumstances arising after the making of the election, the maximum amount which could be fixed by the election is reduced to an amount which is less than the amount specified in the election, that election shall be deemed for the purposes of this Act to have specified the amount to which the maximum is reduced.

(4)A section 59B election shall not be made more than two years after the time when the purchaser acquires the interest in question or, as the case may be, is granted the lease in question.

(5)Where a person who has joined in making a section 59B election subsequently makes a return for his relevant period, a copy of the notice containing the election must accompany the return.

(6)A section 59B election shall be irrevocable once made.

(7)Nothing in section 42 of, or Schedule 1A to, the [1970 c. 9.] Taxes Management Act 1970 (claims in returns and claims not included in returns) shall apply to a section 59B election.

(8)Where any question relating to a section 59B election falls to be determined by any body of Commissioners for the purposes of any proceedings before them—

(a)each of the persons who has joined in making the election shall be entitled to appear and be heard by the Commissioners, or to make representations to them in writing;

(b)the Commissioners shall determine that question separately from any other questions in those proceedings; and

(c)their determination on that question shall have effect as if made in an appeal to which each of those persons was a party.

(9)In this section—

• “relevant period”, in relation to any person who has joined in making a section 59B election, means the period for which a return is made by that person which is the first such period in which the election has an effect in his case for the purposes of income tax or corporation tax; and

• “a section 59B election” means an election under section 59B;

and subsection (6) of section 59B applies for the purposes of this section as it applies for the purposes of that section.

(10)In the case of an election for the purposes of a trade, profession or business carried on by persons in partnership, the references in this section to a return shall be construed, in relation to those persons, as references to a return under section 12AA of the [1970 c. 9.] Taxes Management Act 1970 (partnership returns).”

(2)This paragraph has effect for chargeable periods ending on or after the day on which this Act is passed wherever the time when the fixture in question is or would be treated as ceasing to belong to the former owner is a time on or after that day.