Capital Allowances Act 2001

161 Pre-trading expenditure on mineral exploration and accessU.K.

(1)This section applies if a person—

(a)incurs pre-trading expenditure on the provision of plant or machinery for the purposes of mineral exploration and access, and

(b)owns the plant or machinery on the first day of trading.

But this is subject to subsection (5).

(2)The person is to be treated for the purposes of this Part as if he had—

(a)sold the plant or machinery immediately before the first day of trading, and

(b)on that first day incurred capital expenditure on the provision of the plant or machinery for the purposes of the trade.

(3)The amount of the capital expenditure that the person is to be treated as having incurred is an amount equal to—

(a)the pre-trading expenditure, or

(b)if there has been an actual sale and re-acquisition before the first day of trading, the amount last incurred on the provision of the plant or machinery.

(4)In this section—

[F1(a)“pre-trading expenditure” means capital expenditure incurred before the day on which a person begins to carry on a trade that is a mineral extraction trade, but only if there is no prior time when the person carried on that trade and the trade was not a mineral extraction trade,]

(b)“the first day of trading”, in relation to a person’s pre-trading expenditure, means the day on which that person begins to carry on the mineral extraction trade.

[F2(4A)Section 577(2) (references to commencement etc of a trade) does not apply to subsection (4)(a).]

(5)This section does not apply if the plant or machinery on which the pre-trading expenditure was incurred is sold, demolished, destroyed or abandoned before the first day of trading (but see section 402 (mineral extraction allowances: pre-trading expenditure on plant or machinery)).