Finance Act 1998

83First-year allowances for investment in Northern Ireland

(1)In section 22 of the [1990 c. 1.] Capital Allowances Act 1990 (first-year allowances), after subsection (3C) there shall be inserted the following subsections—

“(3CA)Subject to the provisions of this Part, this section applies to—

(a)any expenditure incurred in the special relief period by a small company or a small business on the provision of machinery or plant for use primarily in Northern Ireland; and

(b)any additional VAT liability incurred in respect of expenditure to which this section applies by virtue of paragraph (a) above.

(3CB)For the purposes of subsection (3CA) above expenditure is incurred in the special relief period if, disregarding any effect of section 83(2) on the time at which it is to be treated as incurred, it is incurred in the period beginning with 12th May 1998 and ending with 11th May 2002.

(3CC)Expenditure is not expenditure to which this section applies by virtue of subsection (3CA) above in so far as it is—

(a)expenditure to which Chapter IVA applies; or

(b)expenditure on the provision of an aircraft or hovercraft.”

(2)After subsection (6C) of that section there shall be inserted the following subsections—

“(6D)Expenditure incurred on the provision of machinery or plant shall not be taken to be expenditure to which this section applies by virtue of subsection (3CA) above if—

(a)at the time when the expenditure is incurred, the person incurring it intends the machinery or plant to be used partly outside Northern Ireland; and

(b)the main benefit, or one of the main benefits, which could reasonably be expected to arise from the relevant arrangements is the obtaining of a first-year allowance, or a greater first-year allowance, in respect of the part of the expenditure that is attributable to the intended outside use.

(6E)In subsection (6D) above—

(a)“the relevant arrangements” means the transaction under which the expenditure is incurred and any scheme or arrangements of which that transaction forms part;

(b)“the intended outside use” means so much of the use of the machinery or plant as (at the time mentioned in paragraph (a) of that subsection) the person intends will be use outside Northern Ireland; and

(c)the reference to the part of the expenditure that is attributable to that use is a reference to so much of the expenditure in question as is so attributable on a just and reasonable basis.”

(3)In subsection (10) of that section after “this section—” there shall be inserted—

• ““hovercraft” has the same meaning as in the [1968 c. 59.] Hovercraft Act 1968.”

(4)After section 22A of that Act there shall be inserted the following section—

“22BWithdrawal of first-year allowance on change of use

(1)Where (but for this section) section 22 would apply to any expenditure by virtue of subsection (3CA) of that section, that section shall be deemed never to have so applied to that expenditure if, at any relevant time—

(a)the primary use to which the machinery or plant is put is a use outside Northern Ireland; or

(b)the machinery or plant is held for use otherwise than primarily in Northern Ireland.

(2)In subsection (1) above “a relevant time”, in relation to any expenditure, means a time which—

(a)falls in the period of two years beginning with the date of the incurring of that expenditure; and

(b)is a time when the machinery or plant belongs to the person who incurred the expenditure or to a person who (within the terms of section 839 of the principal Act) is, or at any time in that period has been, connected with the person who incurred the expenditure.

(3)All such assessments and adjustments of assessments shall be made as may be necessary in consequence of this section.

(4)Where a person who has made a return becomes aware that anything contained in that return has, after the making of the return, become incorrect by reason of the operation of this section, he shall, within three months of first becoming so aware, give notice to an officer of the Board of the amendments that are necessitated in his return in the light of the matter of which he has become aware.”

(5)In the second column of the Table in section 98 of the [1970 c. 9.] Taxes Management Act 1970 (penalties in respect of certain information provisions), in the entry relating to provisions of the [1990 c. 1.] Capital Allowances Act 1990, after “Sections” there shall be inserted “22B(4),”.

(6)Subject to subsection (7) below, the preceding provisions of this section have effect in relation to every chargeable period ending on or after 12th May 1998.

(7)No claim for an allowance falling to be made by virtue of subsection (1) above may be made at any time before such date as the Treasury may by order appoint; and where the period for making any such claim would (but for this subsection) have expired before the end of the period of twelve months beginning with that date, it shall expire, instead, at the end of that period of twelve months.