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Finance Act 1989 (c. 26)

(The document as of February, 2008)

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Non-gilts: special rules

21 (1) In a case where--

(a) all the securities issued on the occasion of the original issue under a particular prospectus (whatever the time of the issue) are neither gilt-edged securities nor deep gain securities,

(b) some of the securities issued under the prospectus are not gilt-edged securities but are new would-be deep gain securities, and

(c) there is a time when the aggregate nominal value of the securities falling within paragraph (b) above (at that time) exceeds the aggregate nominal value of the securities which (looking at the state of affairs at that time) have been issued under the prospectus and are neither gilt-edged securities nor new would-be deep gain securities,

sub-paragraph (2) below shall apply in relation to any security which is not a gilt-edged security but which has been or is issued under the prospectus at any time (whether before, at or after the time mentioned in paragraph (c) above).

(2) As regards any event occurring in relation to the security after the time mentioned in sub-paragraph (1)(c) above, paragraphs 5 to 19 above shall have effect as if--

(a) the security were a deep gain security, and

(b) it had been acquired as such (whatever the time it was acquired).

(3) For the purposes of sub-paragraph (1) above a new would-be deep gain security is a security which--

(a) would be a deep gain security apart from paragraph 1(7) above, and

(b) was issued on or after 14th March 1989.

(4) In sub-paragraph (1) above "gilt-edged security" has the same meaning as in paragraph 1 above.

(5) For the purposes of sub-paragraph (2) above events, in relation to a security, include anything constituting a transfer or acquisition for the purposes of this Schedule.



Indexed securities: special rules

22 (1) Sub-paragraph (2) below applies where--

(a) a qualifying indexed security has been issued,

(b) the person by whom it was issued and the person for the time being holding it make an agreement, on or after 14th March 1989, varying the terms under which it is held, and

(c) the terms as varied are such that, had the security been issued on those terms, it would be a deep gain security.

(2) As regards any event occurring in relation to the security after the agreement is made, paragraphs 5 to 19 above shall have effect as if--

(a) the security were a deep gain security, and

(b) it had been acquired as such (whatever the time it was acquired).

(3) For the purposes of sub-paragraph (2) above events, in relation to a security, include anything constituting a transfer or acquisition for the purposes of this Schedule.

(4) In this paragraph "qualifying indexed security" has the meaning given by paragraph 2 above.



Power to modify

23 (1) The Treasury may make regulations amending paragraph 2 above so as to do one or more of the following--

(a) vary any condition for the time being set out in that paragraph;

(b) omit any condition for the time being so set out;

(c) add a new condition to any for the time being so set out;

(d) substitute a condition or conditions for any condition or conditions for the time being so set out.

(2) Regulations under sub-paragraph (1) above--

(a) shall be made by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons,

(b) shall apply where there is a transfer within the meaning of this Schedule, or a redemption, on or after such day as may be specified in the regulations, and

(c) may include such supplementary, incidental, consequential or transitional provisions as appear to the Treasury to be necessary or expedient.



Section 107.

SCHEDULE 12 Close Companies



Part I Administrative Provisions

Interpretation

1. In this Part of this Schedule "the relevant provisions" means--

(a) sections 13A, 231 and 419 to 422 of the Taxes Act 1988, and

(b) Chapter III of Part XI of that Act (as it has effect in relation to accounting periods beginning before 1st April 1989).



Provision of information by company

2 The inspector may, by notice, require any company which is, or appears to him to be, a close company to furnish him within such time (not being less than 30 days) as may be specified in the notice with such particulars as he thinks necessary for the purposes of the relevant provisions.



Provision of information by shareholders

3 (1) If for the purposes of the relevant provisions any person in whose name any shares are registered is so required by notice by the inspector, he shall state whether or not he is the beneficial owner of the shares and, if not the beneficial owner of the shares, shall furnish the name and address of the person or persons on whose behalf the shares are registered in his name.

(2) This paragraph shall apply in relation to loan capital as it applies in relation to shares.



Information about bearer securities

4 (1) The inspector may, for the purposes of the relevant provisions, by notice require--

(a) any company which appears to him to be a close company to furnish him with particulars of any bearer securities issued by the company, and the names and addresses of the persons to whom the securities were issued and the respective amounts issued to each person, and

(b) any person to whom bearer securities were issued by the company, or to or through whom such securities were subsequently sold or transferred, to furnish him with such further information as he may require with a view to enabling him to ascertain the names and addresses of the persons beneficially interested in the securities.

(2) In this paragraph--

  • "loan creditor" has the same meaning as in Part XI of the Taxes Act 1988, and

  • "securities" includes shares, stock, bonds, debentures and debenture stock and also any promissory note or other instrument evidencing indebtedness to a loan creditor of the company.



Part II Amendments Connected with Repeal of Chapter III of Part XI of Taxes Act 1988

The Taxes Management Act 1970 (c. 9)

5. In the first column of the Table in section 98 of the Taxes Management Act 1970 (penalty for failure to give particulars etc.) there shall be added at the end--

" Paragraphs 2 to 4 of Schedule 12 to the Finance Act 1989. "



The Capital Gains Tax Act 1979 (c. 14)

6 (1) In section 136 of the Capital Gains Tax Act 1979 (relief in respect of loans to traders) in subsection (10)(b) for the words "paragraph 7 of Schedule 19 to the Taxes Act 1988" there shall be substituted the words "paragraph 1 of Schedule 20 to the [1985 c. 54.] Finance Act 1985".

(2) This paragraph shall have effect where the claim under section 136 is made after 31st March 1989.



The Income and Corporation Taxes Act 1988 (c. 1)

7. In section 13 of the Taxes Act 1988 (small companies' rate) in subsection (9) for the words "paragraph 17 of Schedule 19" there shall be substituted the words "paragraphs 2 to 4 of Schedule 12 to the Finance Act 1989".

8 (1) In section 168(11) of the Taxes Act 1988 (cases in which a person has a material interest in a company for the purposes of Chapter II of Part V of that Act) for the words from "in a company" to the end of paragraph (b) there shall be substituted--

  • " in a company if he, either on his own or with one or more associates, or if any associate of his with or without such other associates,--

    (a)

    is the beneficial owner of, or able, directly or through the medium of other companies, or by any other indirect means to control, more than 5 per cent. of the ordinary share capital of the company, or

    (b)

    in the case of a close company, possesses, or is entitled to acquire, such rights as would, in the event of the winding-up of the company or in any other circumstances, give an entitlement to receive more than 5 per cent. of the assets which would then be available for distribution among the participators. " ;

and at the end there shall be added the words ", and "participator" has the meaning given by section 417(1)"

(2) This paragraph shall have effect in relation to accounting periods beginning after 31st March 1989.

9 (1) In section 187(3) of the Taxes Act 1988 (cases in which a person has a material interest in a company for the purposes of sections 185 to 187 of, and Schedules 9 and 10 to, that Act) for the words from "in a company" to the end of paragraph (b) there shall be substituted-- " in a company if he, either on his own or with one or more associates, or if any associate of his with or without such other associates,--

(a) is the beneficial owner of, or able, directly or through the medium of other companies, or by any other indirect means to control, more than 25 per cent., or in the case of a share option scheme which is not a savings-related share option scheme more than 10 per cent., of the ordinary share capital of the company, or

(b) where the company is a close company, possesses, or is entitled to acquire, such rights as would, in the event of the winding-up of the company or in any other circumstances, give an entitlement to receive more than 25 per cent., or in the case of a share option scheme which is not a savings-related share option scheme more than 10 per cent., of the assets which would then be available for distribution among the participators. " ;

and at the end there shall be added the words "and "participator" has the meaning given by section 417(1)"

(2) This paragraph shall have effect in relation to accounting periods beginning after 31st March 1989.

10 (1) In section 214 of the Taxes Act 1988 (chargeable payments connected with exempt distributions) in subsection (1)(c) for the words from "338(2)(a)" to "Schedule 19" there shall be substituted the words "and 338(2)(a)".

(2) This paragraph shall have effect in relation to accounting periods beginning after 31st March 1989, except in any case where section 427(4) of the Taxes Act 1988 has effect by virtue of section 103(2) of this Act.

11 In section 234 of the Taxes Act 1988 (information relating to distributions) in subsection (9) for the words from "paragraph 17" to "that Schedule" there shall be substituted the words "paragraphs 2 to 4 of Schedule 12 to the Finance Act 1989 for the purposes of the relevant provisions (as defined in paragraph 1 of that Schedule)".

12 (1) Section 360 of the Taxes Act 1988 (loan to buy interest in a close company) shall be amended in accordance with this paragraph.

(2) In subsection (1)(a) for the words from "satisfying" to "424(4)" there shall be substituted the words "complying with section 13A(2)".

(3) In subsections (2)(a) and (3)(a) for the words "satisfy any of the conditions of section 424(4)" there shall be substituted the words "comply with section 13A(2)".

(4) This paragraph shall have effect in relation to interest paid on or after the day on which this Act is passed (and, accordingly, the conditions of section 424(4) of the Taxes Act 1988 shall continue to have effect for the purposes of section 360 of that Act in relation to interest paid before that day).

13 (1) Section 360A of the Taxes Act 1988 (cases in which a person has a material interest in a company for the purposes of section 360(2)(a)) shall be amended in accordance with this paragraph.

(2) In subsection (1) for the words from "in a company" onwards there shall be substituted--

  • " in a company if he, either on his own or with one or more associates, or if any associate of his with or without such other associates,--

    (a)

    is the beneficial owner of, or able, directly or through the medium of other companies, or by any other indirect means to control, more than 5 per cent. of the ordinary share capital of the company, or

    (b)

    possesses, or is entitled to acquire, such rights as would, in the event of the winding-up of the company or in any other circumstances, give an entitlement to receive more than 5 per cent. of the assets which would then be available for distribution among the participators. "

(3) In subsection (10) after the word "section" there shall be inserted the words ""participator" has the meaning given by section 417(1) and".

(4) This paragraph shall have effect in relation to accounting periods beginning after 31st March 1989.

14 (1) In section 576 of the Taxes Act 1988 (which relates to relief for losses on certain unquoted shares) in subsection (5), for paragraph (a) of the definition of "trading company" there shall be substituted--

" (a) a company whose business consists wholly or mainly of the carrying on of a trade or trades " .

(2) This paragraph shall have effect in relation to disposals made after 31st March 1989.

15 (1) In section 623 of the Taxes Act 1988 (meaning of "relevant earnings" for the purposes of Chapter III of Part XIV of that Act) in subsection (2) for the words "(construed in accordance with paragraph 7 of Schedule 19)" there shall be substituted the words "(that is to say, income which, if the company were an individual, would not be earned income)".

(2) This paragraph shall have effect in relation to accounting periods beginning after 31st March 1989.

16 (1) In section 644 of the Taxes Act 1988 (meaning of "relevant earnings" for the purposes of Chapter IV of Part XIV of that Act) in subsection (6) for the definition of "investment income" there shall be substituted--

" "investment income" means income which, if the company were an individual, would not be earned income. "

(2) This paragraph shall have effect in relation to accounting periods beginning after 31st March 1989.

17 In section 745 of the Taxes Act 1988 (power to obtain information for the purposes of Chapter III of Part XVII of that Act) in subsection (4) for the words from "trading" onwards there shall be substituted the words "companies whose business consists wholly or mainly of the carrying on of a trade or trades."

18 (1) Paragraph 7 of Schedule 8 to the Taxes Act 1988 (cases in which a person has a material interest in a company for the purposes of a profit-related pay scheme) shall be amended in accordance with this paragraph.

(2) In sub-paragraph (2) for the words from "in a company" onwards there shall be substituted--

  • " in a company if he, either on his own or with one or more associates, or if any associate of his with or without such other associates,--

    (a)

    is the beneficial owner of, or able, directly or through the medium of other companies, or by any other indirect means to control, more than 25 per cent. of the ordinary share capital of the company, or

    (b)

    in the case of a close company, possesses, or is entitled to acquire, such rights as would, in the event of the winding-up of the company or in any other circumstances, give an entitlement to receive more than 25 per cent. of the assets which would then be available for distribution among the participators " .

(3) In sub-paragraph (3) the second "and" shall be omitted and after the definition of "control" there shall be inserted " and

"participator" has the meaning given by section 417(1) " .

(4) This paragraph shall have effect in relation to accounting periods beginning after 31st March 1989.



Section 121.

SCHEDULE 13 Capital Allowances: Miscellaneous Amendments



Buildings etc. bought after use

1 (1) In the [1968 c. 3.] Capital Allowances Act 1968 ("the 1968 Act") after section 5 (buildings and structures bought unused) there shall be inserted--

" 5A Buildings and structures bought after use

(1) This section applies where--

(a) expenditure is incurred on the construction of a building or structure by a person carrying on a trade which consists, in whole or part, in the construction of buildings or structures with a view to their sale, and

(b) after the building or structure has been used, he sells the relevant interest in it in the course of that trade or, as the case may be, of that part of that trade.

(2) Where this section applies, this Chapter shall have effect in relation to the person who buys the interest as if--

(a) the original expenditure had been capital expenditure,

(b) all appropriate writing-down allowances had been made to the person incurring it, and

(c) all appropriate balancing allowances or charges had been made on the occasion of the sale. "

(2) This paragraph shall have effect in any case where the purchase price payable on any sale becomes payable on or after the day on which this Act is passed.



Roads on industrial estates

2 (1) In section 7 of the 1968 Act (definition of "industrial building or structure"), after subsection (3A) there shall be inserted--

" (3B) A road on an industrial estate shall be treated as used for the purposes of a trade which falls within subsection (1) above if the buildings and structures on the estate are used wholly or mainly for such purposes. "

(2) This paragraph shall have effect in relation to any chargeable period or its basis period ending on or after the day on which this Act is passed.



Contributions to expenditure

3 (1) Section 84 of the 1968 Act (under which certain contributions etc. reduce allowable expenditure) shall be amended as follows.

(2) At the end of paragraph (b) of subsection (2) there shall be added the words "and not being expenditure which is allowed to be deducted in computing the profits or gains of a trade, profession or vocation carried on by that person".

(3) After subsection (2) there shall be inserted--

" (2A) In determining for the purposes of subsection (2)(b) above whether an allowance could be made under the provisions of section 85 below, it shall be assumed that the person by whom expenditure has been or is to be met is within the charge to tax, whether or not that is in fact the case. "

(4) This paragraph shall have effect in relation to expenditure incurred on or after the day on which this Act is passed except in so far as a contribution to the expenditure was made before that day.

4 (1) In section 85 of the 1968 Act (which gives allowances in respect of certain contributions), after subsection (3) there shall be inserted--

" (3A) References in this section, and in Schedule 9 to this Act, to a trade shall be construed as including references to a profession or vocation. "

(2) This paragraph shall have effect in relation to contributions made on or after the day on which this Act is passed.

5 (1) This paragraph applies where allowances are made in respect of a contribution to capital expenditure by virtue of section 85 of the 1968 Act as applied by paragraph 15(6) of Schedule 8 to the [1971 c. 68.] Finance Act 1971.

(2) Where this paragraph applies in relation to a contribution made for the purposes of a trade carried on or to be carried on by the contributor, it shall be assumed for the purposes of section 44 of the Finance Act 1971--

(a) that the contribution was made for the purposes of a trade carried on by the contributor separately from any trade actually carried on by him, and

(b) that the separate trade is discontinued or transferred (in whole or in part) when the trade actually carried on is discontinued or transferred (in whole or in part);

and any allowance or charge which would on those assumptions fall to be made for any chargeable period in the case of the separate trade shall be made for that period in the case of the trade for the purposes of which the contribution was actually made.

(3) References in sub-paragraph (2) above to a trade shall be construed as including references to a profession or vocation.

(4) This paragraph shall have effect in relation to contributions made on or after the day on which this Act is passed.

6 (1) In its application in relation to allowances under Schedule 15 to the [1986 c. 41.] Finance Act 1986 (agricultural land and buildings), Schedule 9 to the 1968 Act shall have effect--

(a) with the omission of paragraph 4, and

(b) as if, in paragraph 3, the references to section 11 of the 1968 Act and to expenditure incurred on the construction of a building or structure were references to paragraph 3 of Schedule 15 to the Finance Act 1986 and to expenditure falling within paragraph 1(1) of that Schedule.

(2) This paragraph shall have effect in relation to contributions made on or after the day on which this Act is passed.



Scientific research

7 (1) In section 91 of the 1968 Act (allowances for expenditure on scientific research), after subsection (1B) there shall be inserted--

" (1C) Subject to subsections (1A) and (1B) above, where a person incurs capital expenditure which is partly within subsection (1) above and partly not, such apportionment of the expenditure shall be made for the purposes of this Part of this Act as may be just. "

(2) This paragraph shall have effect in relation to expenditure incurred on or after the day on which this Act is passed.

8 The amendments made in section 92 of the 1968 Act (assets ceasing to be used for scientific research) by section 63 of the [1985 c. 54.] Finance Act 1985 shall have effect in relation to any case where the relevant event (within the meaning given in section 92(1)) occurs on or after 1st April 1989 (as well as in the cases provided for by section 63(7) where it occurs before that date).

9 (1) In section 94 of the 1968 Act (interpretation of Part II), after subsection (4) there shall be added--

" (4A) Any reference in this Part of this Act to the time when an asset ceases to belong to a person shall, in the case of a sale, be construed as a reference to the time of completion or the time when possession is given, whichever is the earlier. "

(2) This paragraph shall have effect in any case where the sale is effected, or the contract for sale entered into, on or after the day on which this Act is passed.



Hire-purchase, leases etc.

10 (1) In section 45(1) of the [1971 c. 68.] Finance Act 1971 (machinery or plant held by a person under a hire-purchase or similar agreement to be treated as belonging to him), in paragraph (a), after the words "to him" there shall be inserted the words "(and not to any other person)".

(2) This paragraph shall have effect in relation to capital expenditure incurred under contracts entered into on or after the day on which this Act is passed.

11 In section 46 of the Finance Act 1971 (machinery and plant on lease) after subsection (2) there shall be inserted--

" (2A) In this section "lease" includes an agreement for a lease where the term to be covered by the lease has begun, and any tenancy, but does not include a mortgage, and "lessee" and other cognate expressions shall be construed accordingly. "

12 (1) In section 48 of the Finance Act 1971, after subsection (4) (which provides for the manner of making capital allowances and imposes restrictions in certain cases where the machinery or plant is on lease), there shall be inserted--

" (4A) Section 403(3) of the Taxes Act (group relief) shall not apply to an allowance if or to the extent that, by virtue of the proviso to subsection (4) above, subsection (3) of the said section 74 does not apply to it. "

(2) This paragraph shall have effect in any case where the accounting period of the surrendering company (within the meaning of Chapter IV of Part X of the Taxes Act 1988) ends on or after the day on which this Act is passed.



Gifts of machinery or plant

13 (1) Paragraph 7 of Schedule 8 to the Finance Act 1971 (effect of use after user not attracting capital allowances, or after receipt by way of gift) shall be amended as follows.

(2) In sub-paragraph (1) the words "Subject to sub-paragraph (2) below" and the words from "by reason of" to the end of paragraph (b) shall cease to have effect.

(3) After sub-paragraph (1A) there shall be inserted--

" (1B) Where a person is treated as having incurred capital expenditure on the provision of machinery or plant by virtue of sub-paragraph (1)(b) above, he shall for the purposes of paragraph 3 above be treated as having done so by way of purchase from the donor. "

(4) This paragraph shall have effect in cases where machinery or plant is brought into use on or after the day on which this Act is passed.



Allowances for ships

14 (1) In paragraph 8A of Schedule 8 to the [1971 c. 68.] Finance Act 1971 (which enables shipowners to elect to defer allowances in certain cases), in sub-paragraph (1)(b), for the words from "the expenditure" to "falling" there shall be substituted the words "the ship is not provided for leasing or letting on charter otherwise than by way of lease, or is so provided but it appears that the ship will be used in the requisite period (within the meaning of section 64 of the [1980 c. 48.] Finance Act 1980) for a qualifying purpose (within the meaning of that section) and will not at any time in that period be used for any other purpose, and the expenditure does not fall".

(2) This paragraph shall have effect in relation to expenditure incurred on or after the day on which this Act is passed.

15 (1) In section 58 of the [1985 c. 54.] Finance Act 1985 (extension of first-year allowances to ships which are not new), after subsection (2) there shall be added--

" (3) In consequence of subsection (1) above--

(a) no disclaimer or claim under section 41(3) of the Finance Act 1971 may be made in respect of any ship,

(b) section 66(7) of the Finance Act 1980 and paragraph 3 of Schedule 11 to the [1982 c. 39.] Finance Act 1982 shall have effect with the omission of the word "new" in each place where it occurs, and

(c) section 59(4)(c) and (6)(c) of the [1984 c. 43.] Finance Act 1984 shall have effect with the omission of the word "new". "

(2) Paragraph (a) of section 58(3) of the Finance Act 1985 shall have effect in relation to disclaimers and claims made on or after the day on which this Act is passed, paragraph (b) of that subsection shall have effect in any case where the requisite period begins on or after that day and paragraph (c) of that subsection shall come into force on that day.



Sales etc. and succession to trades between connected persons

16 (1) In paragraph 13 of Schedule 8 to the Finance Act 1971 (successions to trades between connected persons), after sub-paragraph (3) there shall be inserted--

" (3A) Section 48(1) of the [1968 c. 3.] Capital Allowances Act 1968 and section 65(5) of the Finance Act 1980 shall not apply in any case where an election is made under this paragraph. "

(2) This paragraph shall have effect in relation to successions occurring on or after the day on which this Act is passed.

17 In section 68(4) of the [1972 c. 41.] Finance Act 1972 (which modifies the restrictions on allowances imposed by paragraph 3 of Schedule 8 to the [1972 c. 41.] Finance Act 1971 in the case of sales etc. between connected persons) for paragraphs (b) and (c) there shall be substituted--

" (b) where capital expenditure was incurred by the seller on the provision of the machinery or plant, the amount of that expenditure;

(c) where capital expenditure was incurred by any person connected with the seller on the provision of the machinery or plant, the amount of the expenditure incurred by that person. "



Leased assets

18 In section 73(5) of the [1980 c. 48.] Finance Act 1980 (application of sections 64 to 72 to activities other than trades), for the words "first-year" there shall be substituted the words "writing-down".

19 In Schedule 11 to the [1982 c. 39.] Finance Act 1982, in paragraph 4(3), for the reference to section 243(2) of the Taxes Act 1988 there shall be substituted a reference to section 343(2).



Dwelling-houses

20 (1) In paragraph 4(5)(c) of Schedule 12 to the Finance Act 1982 (application of section 78 of and Schedule 7 to the 1968 Act to certain sales of dwelling-houses), for the words "are at the time of the sale" there shall be substituted the words "at the time of the sale are or at any earlier time were".

(2) This paragraph shall have effect in any case where the time of the sale referred to in paragraph 4(5)(c) is after 14th January 1989.



Short-life assets

21 (1) In section 57(6) of the [1985 c. 54.] Finance Act 1985 (election for certain machinery or plant to be treated as short-life assets)--

(a) for the words "the short-life asset" there shall be substituted the words "a short-life asset provided for leasing", and

(b) in paragraph (b)--

(i) after the word "expenditure", where it first appears, there shall be inserted the words "in respect of the notional trade",

(ii) for the words following "1980)" there shall be substituted the words "be, or be added to, the trader's qualifying expenditure for that chargeable period."

(2) The amendment made by sub-paragraph (1)(b)(i) above is to section 57(6) of the Finance Act 1985 as it has effect as amended by section 57(6) of the [1986 c. 41.] Finance Act 1986 and as it has effect by virtue of section 57(7) of that Act and the amendment made by sub-paragraph (1)(b)(ii) above is to section 57(6) of the Finance Act 1985 as it has effect by virtue of section 57(7) of the Finance Act 1986.

(3) This paragraph shall have effect in relation to any chargeable period or its basis period ending on or after the day on which this Act is passed.

22 (1) In Schedule 15 to the Finance Act 1985 (machinery and plant excluded from treatment as short-life assets), for paragraph 8 (leased assets) there shall be substituted--

" 8. Machinery or plant provided for leasing, except--

(a) machinery or plant which it appears will be used in the requisite period (within the meaning of section 64 of the Finance Act 1980) for a qualifying purpose (within the meaning of that section) and will not at any time in that period be used for any other purpose,

(b) vehicles of the kind mentioned in subsection (12) of that section. "

(2) In paragraph 9 of that Schedule (leased assets) for the words from "1980" to the end there shall be substituted the word "applies".

(3) This paragraph shall have effect in relation to expenditure incurred on or after the day on which this Act is passed.



Machinery and plant which are fixtures

23 (1) In Schedule 17 to the [1985 c. 54.] Finance Act 1985, in paragraph 9 (disposal value of fixtures) in sub-paragraph (10), for the words "another person" onwards there shall be substituted the words " --

(a) another person incurs expenditure on the provision of the fixture, and

(b) the former owner brings a disposal value into account in accordance with section 44 of the [1971 c. 68.] Finance Act 1971,

there shall be disregarded for material purposes so much (if any) of that expenditure as exceeds that disposal value " .

(2) This paragraph shall have effect in relation to expenditure incurred on or after the day on which this Act is passed.



Mineral extraction

24 (1) In Schedule 13 to the [1986 c. 41.] Finance Act 1986 (new code for minerals), in paragraph 16(5) (unrelieved value for the purposes of qualifying expenditure), for the reference to section 55 of that Act there shall be substituted a reference to Schedule 15.

(2) This paragraph shall have effect in cases where buildings or structures cease, on or after the day on which this Act is passed, permanently to be used for any purpose.



Agricultural land and buildings

25 At the end of section 56(3) of the Finance Act 1986 (interpretation of new provisions relating to agriculture), there shall be added the words "and section 4(11) of and Chapter VI of Part I of the [1968 c. 3.] Capital Allowances Act 1968 shall apply in relation to Schedule 15 as they apply in relation to section 68 of that Act".

26 In paragraph 7(3) of Schedule 15 to the Finance Act 1986 (amount of writing-down allowances after a balancing event) the words "subject to paragraph 9 below" shall be omitted.



Patent rights

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27 (1) Section 521 of the Taxes Act 1988 shall be amended as follows.

(2) In subsection (5) (which limits allowable expenditure in the case of certain sales entered into between connected persons or for the purpose of obtaining an allowance)--

(a) the words "within the terms of section 839" shall be omitted, and

(b) for the words "the disposal value" onwards there shall be substituted the words "the relevant amount determined in accordance with subsection (6) below".

(3) After subsection (5) there shall be added--

" (6) The relevant amount referred to in subsection (5) above is--

(a) in a case in which, by virtue of subsections (2) to (4) above, a disposal value falls to be brought into account by reason of the sale, an amount equal to that disposal value,

(b) in a case in which no disposal value falls to be brought into account as mentioned in paragraph (a) above, but the seller receives on the sale a capital sum in respect of which he is chargeable to tax in accordance with section 524, an amount equal to that sum,

(c) in any other case, an amount equal to whichever of the following is the smallest--

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