Finance Act 2001

Part 5Supplementary provisions

Artificially inflated claims for deduction, relief or tax credit

29(1)To the extent that a transaction is attributable to arrangements entered into wholly or mainly for a disqualifying purpose, it shall be disregarded in determining for an accounting period the amount of—

(a)any deduction for capital expenditure which is allowed under paragraph 1,

(b)any land remediation relief to which a company is entitled under paragraph 12,

(c)any land remediation tax credit to which a company is entitled under paragraph 14,

(d)any relief to which a company carrying on life assurance business is entitled under paragraph 22, and

(e)any life assurance company tax credit to which such a company is entitled under paragraph 24.

(2)Arrangements are entered into wholly or mainly for a “disqualifying purpose” if their main object, or one of their main objects, is to enable a company to obtain—

(a)a deduction for capital expenditure which would not otherwise be allowed or of a greater amount than that which would otherwise be allowed;

(b)land remediation relief to which the company would not otherwise be entitled or of a greater amount than that to which it would otherwise be entitled;

(c)a land remediation tax credit to which it would not otherwise be entitled or of a greater amount than that to which it would otherwise be entitled;

(d)relief under paragraph 22 to which it would not otherwise be entitled or of a greater amount than that to which it would otherwise be entitled; or

(e)a life assurance company tax credit to which it would not otherwise be entitled or of a greater amount than that to which it would otherwise be entitled.

(3)In this paragraph “arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable.

Funding of tax credits

30Section 10 of the Exchequer and Audit Departments Act 1866 (c. 39) (gross revenues to be paid to Exchequer) shall be construed as allowing the Commissioners of Inland Revenue to deduct payments for or in respect of—

(a)land remediation tax credits, and

(b)life assurance company tax credits,

before causing the gross revenues of their department to be paid to the accounts mentioned in that section.

Interpretation

31(1)In this Schedule—

• “harm” means—

  (a)

  harm to the health of living organisms,

  (b)

  interference with the ecological systems of which any living organisms form part,

  (c)

  offence to the senses of human beings, or

  (d)

  damage to property;

• “the Inland Revenue” means any officer of the Board;

• “insurance company” has the same meaning as it has in Chapter 1 of Part 12 of the Taxes Act 1988;

• “land” means any estate, interest or rights in or over land;

• “life assurance business” has the same meaning as it has in Chapter 1 of Part 12 of the Taxes Act 1988;

• “national insurance contributions” means contributions under Part 1 of the Social Security Contributions and Benefits Act 1992 (c. 4) or Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7);

• “pollution of controlled waters” means the entry into controlled waters of any poisonous, noxious or polluting matter or any solid waste matter;

• “qualifying loss” has the meaning given in paragraph 24;

• “qualifying land remediation loss” has the meaning given in paragraph 14;

• “Schedule A loss” has the meaning given by section 392A of the Taxes Act 1988; and

• “substance” means any natural or artificial substance, whether in solid or liquid form or in the form of a gas or vapour.

(2)In this Schedule “controlled waters”—

(a)in relation to England and Wales, has the same meaning as in Part 3 of the Water Resources Act 1991 (c. 57);

(b)in relation to Scotland, has the same meaning as in section 30A of the Control of Pollution Act 1974 (c. 40);

(c)in relation to Northern Ireland, means water in waterways and underground strata (as defined in Article 2(2) of the Water (Northern Ireland) Order 1999 (S.I. 1999/662 (N.I. 6)) ).

(3)For the purposes of this Schedule, a person has a relevant connection to a company in a case where the company’s land is in a contaminated state wholly or partly as a result of any thing done or omitted to be done by the person if—

(a)he is or was connected to the company when any such thing is or was done, or omitted to be done, by him,

(b)he is or was connected to the company at the time when the land in question is or was acquired by the company, or

(c)he is or was connected to the company at any time when relevant land remediation is or was undertaken by the company (whether directly or on its behalf).

(4)Section 839 of the Taxes Act 1988 (connected persons) applies for the purposes of this Schedule.

Transitional provisions

32(1)This Schedule does not apply to expenditure incurred before the day on which this Act is passed.

(2)For this purpose no account shall be taken of section 401 of the Taxes Act 1988 (earlier expenditure treated as incurred when Schedule A business or trading begins).