Finance Act 2000

72 Expenditure of a small enterprise.U.K.

After section 22A of the M1Capital Allowances Act 1990, insert—

“22AA Expenditure of a small enterprise.

(1)For the purposes of section 22 capital expenditure incurred by a company is capital expenditure incurred by a small enterprise if the company—

(a)qualifies as small in relation to the financial year of the company in which the expenditure is incurred, and

(b)is not a member of a large or medium-sized group at the time when the expenditure is incurred.

(2)For the purposes of section 22, capital expenditure is capital expenditure incurred by a small enterprise if—

(a)it is incurred by a business for the purposes of a trade (the “first trade”) carried on by that business, and

(b)were the first trade carried on by a company (the “hypothetical company”) in the circumstances set out in subsection (3) below, that company would qualify as small in relation to the financial year of that company in which the expenditure would be treated as incurred.

(3)Those circumstances are—

(a)that every trade, profession or vocation carried on by the business concerned is carried on by the business as a part of the first trade,

(b)that the financial years of the hypothetical company coincide with the chargeable periods of the business concerned, and

(c)that accounts of the hypothetical company for any relevant chargeable period were prepared in accordance with the requirements of the Companies Act 1985 as if that period were a financial year of the company.

(4)Subject to subsection (5) below, a company is a member of a large or medium-sized group at the time when any expenditure is incurred if —

(a)it is at that time the parent undertaking of a group which does not qualify as small in relation to the financial year of the parent company in which that time falls; or

(b)it is at that time a subsidiary undertaking in relation to the parent undertaking of such a group.

(5)If, at the time when any expenditure is incurred by any company any arrangements exist which are such that, had effect been given to them immediately before that time, the company or a successor of the company would, at that time, have been a member of a large or medium-sized group, this section shall have effect as if the company concerned was a member of a large or medium-sized group at that time.

(6)In this section the following expressions have the same meaning as in section 22A above: “arrangements”, “business”, “company”, “financial year”, “group”, “parent undertaking” and “subsidiary undertaking”.

(7)References in this section, in relation to a company, to its qualifying as small—

(a)except in the case of a company formed and registered in Northern Ireland, are references to its so qualifying, or being treated as so qualifying, for the purposes of section 247 of the M2Companies Act 1985; and

(b)in the case of a company so formed and registered, are references to a company so qualifying, or being treated as so qualifying, for the purposes of Article 255 of the Companies (Northern Ireland) Order 1986.

(8)In relation to a company with respect to which the question arises whether it is or would be a member of a large or medium-sized group, references to a group’s qualifying as small—

(a)except in the case of a company formed and registered in Northern Ireland, are references to its so qualifying, or being treated as so qualifying, for the purposes of section 249 of the M3Companies Act 1985; and

(b)in the case of a company so formed and registered, are references to its so qualifying, or being treated as so qualifying, for the purposes of Article 257 of the Companies (Northern Ireland) Order 1986;

but for the purposes of this section each of those provisions shall be construed as if references, in relation to a group, to the parent company were references to the parent undertaking.

(9)For the purposes of this section a company is the successor of another if—

(a)it carries on a trade which, in whole or in part, the other company has ceased to carry on, and

(b)the circumstances are such that section 343 of the principal Act applies in relation to the two companies as the predecessor and the successor within the meaning of that section.”.