Finance Act 2001 (c. 9)

(The document as of February, 2008)

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Introductory

4 Schedule 15 to the Finance Act 2000 (c. 17) (corporate venturing scheme) is amended in accordance with this Part.

Money raised by issue of shares

5 (1) In paragraph 36 (requirement that money raised is employed for purposes of a relevant trade), for sub-paragraph (1) substitute--

" (1) At least 80% of the money raised by the issuance of the relevant issue of shares must have been employed wholly for the purposes of a relevant trade not later than the time determined in accordance with sub-paragraph (1B).

(1A) All of the money so raised must have been so employed not later than 12 months after that time.

(1B) The time referred to in sub-paragraph (1) is--

(a) the end of the period of 12 months beginning with the issue of the shares, or

(b) where the relevant trade was not being carried on at the time the shares were issued, the end of the period of 12 months beginning when the issuing company or a subsidiary begins to carry on the relevant trade.

(1C) Sub-paragraphs (1) and (1A) are subject to sub-paragraph (5). " .

(2) In sub-paragraph (5) of that paragraph--

(a) in paragraph (a) for "any of the money mentioned in sub-paragraph (1)" substitute "any of the money raised by the issuance of the relevant issue of shares", and

(b) for "the requirement of sub-paragraph (1)" substitute "the requirement of sub-paragraph (1) does not apply and the requirement of sub-paragraph (1A)".

(3) The amendments made by this paragraph have effect--

(a) in relation to shares issued on or after 7th March 2001, and

(b) in respect of the application of Schedule 15 to the Finance Act 2000 (c. 17) (corporate venturing scheme) on or after 7th March 2001 in relation to shares--

(i) that were issued after 31st March 2000 but before 7th March 2001, and

(ii) to which investment relief (within the meaning of that Schedule) was attributable immediately before 7th March 2001.

Receipt of replacement value

6 (1) In paragraph 54 (receipt of replacement value), at the beginning of sub-paragraph (1)(c) insert "the amount of".

(2) After sub-paragraph (2) of that paragraph insert--

" (2A) Where the amount of the original value is, by virtue of paragraph 51, treated as reduced for the purposes of paragraph 47, the reference in sub-paragraph (1)(c) to the amount of the original value shall be read as a reference to the amount of that value disregarding the reduction. " .

(3) In sub-paragraph (3) of that paragraph (qualifying receipts), for paragraphs (a) to (c) substitute--

" (a) by reason of the original recipient doing one or more of the following--

(i) making a payment to the original supplier other than an excepted payment;

(ii) acquiring any asset from the original supplier for a consideration the amount or value of which is more than the market value of the asset;

(iii) disposing of any asset to the original supplier for no consideration or for a consideration the amount or value of which is less than the market value of the asset; or

(b) where the receipt of the original value was within paragraph 49(1)(d), by reason of an event the effect of which is to reverse the event which constituted the receipt of the original value. " .

(4) After that sub-paragraph insert--

" (3A) For the purposes of sub-paragraph (3)(a)(i), the following are excepted payments--

(a) any payment for any goods, services or facilities, provided (whether in the course of a trade or otherwise) by--

(i) the original supplier, or

(ii) any other person who, at any time in the period of restriction relating to the relevant shares, is an associate of, or connected with, that supplier (whether or not he is such an associate, or so connected, at the material time),

which is reasonable in relation to the market value of those goods, services or facilities;

(b) any payment of any interest which represents no more than a reasonable commercial return on money lent to--

(i) the original recipient, or

(ii) any other person who, at any time in the period of restriction relating to the relevant shares, is an associate of, or connected with, that recipient (whether or not he is such an associate, or so connected, at the material time);

(i) that recipient, or

(ii) any person who, at any time in the period of restriction relating to the relevant shares, is an associate of, or connected with, that recipient (whether or not he is such an associate, or so connected, at the material time),

of an amount not exceeding a reasonable and commercial rent for the property;

(d) any payment within paragraph (c), (d) or (f) of the definition of "qualifying payment" in paragraph 49(5); and

(e) any payment for shares in or securities of any company in circumstances that do not fall within sub-paragraph (3)(a)(ii). " .

(5) For sub-paragraph (4) of that paragraph (calculation of amounts of original and replacement value) substitute--

" (4) For the purposes of this paragraph, the amount of the replacement value is--

(a) in a case within paragraph (a) of sub-paragraph (3), the aggregate of--

(i) the amount of any payment within sub-paragraph (i) of that paragraph, and

(ii) the difference between the market value of any asset to which sub-paragraph (ii) or (iii) of that paragraph applies and the amount or value of the consideration (if any) received for it, and

(b) in a case within sub-paragraph (3)(b), the amount of the original value,

and paragraph 50 shall apply for the purposes of determining the amount of the original value. " .

(6) The amendment made by sub-paragraph (1) shall be deemed always to have had effect.

(7) Subject to that, the amendments made by this paragraph have effect--

(a) in relation to shares issued on or after 7th March 2001, and

(b) in relation to shares issued after 31st March 2000 but before 7th March 2001, in respect of value received (within the meaning of paragraph 49 of Schedule 15 to the Finance Act 2000 (c. 17)) on or after 7th March 2001.

7 (1) In paragraph 55 (provision supplementary to paragraph 54), after sub-paragraph (4) insert--

" (5) In this paragraph "the original value" and "the replacement value" shall be construed in accordance with paragraph 54. " .

(2) The amendment made by this paragraph shall be deemed always to have had effect.

Value received by other persons

8 (1) In paragraph 56 (reduction or withdrawal of investment relief as a result of value received by certain persons), in sub-paragraph (3) (receipts of value which do not result in the withdrawal or reduction of relief), after paragraph (c) insert--

" or it would have the effect mentioned in paragraph (a), (b) or (c) were it not a receipt of insignificant value for the purposes of paragraph 47 (value received by the investing company), section 300 of the Taxes Act 1988 or paragraph 13 of Schedule 5B to the 1992 Act, as the case may be " .

(2) The amendment made by this paragraph has effect--

(a) in relation to shares issued on or after 7th March 2001, and

(b) in respect of shares issued after 31st March 2000 but before 7th March 2001, in relation to any repayment (within the meaning of paragraph 57(2) of Schedule 15 to the Finance Act 2000) made on or after 7th March 2001.

Insignificant repayments disregarded

9 (1) In paragraph 57 (repayments etc. of insignificant amounts disregarded for the purposes of paragraph 56), in sub-paragraph (1) after "remaining" insert "issued".

(2) In sub-paragraph (3) of that paragraph for "payment" substitute "repayment".

(3) The amendment made by sub-paragraph (1) has effect--

(a) in relation to shares issued on or after 7th March 2001, and

(b) in respect of shares issued after 31st March 2000 but before 7th March 2001, in relation to repayments (within the meaning of paragraph 57(2) of Schedule 15 to the Finance Act 2000) made on or after 7th March 2001.

(4) The amendment made by sub-paragraph (2) shall be deemed always to have had effect.

Section 65.

SCHEDULE 17 Capital allowances: energy-saving plant and machinery

1 In section 39 of the Capital Allowances Act 2001 (c. 2) (first-year allowances available for certain types of expenditure only), at the end add-- " , or

section 45A

expenditure on energy-saving plant or machinery. " .

2 After section 45 of that Act insert--

" 45A Expenditure on energy-saving plant or machinery

(1) Expenditure is first-year qualifying expenditure if--

(a) it is expenditure on energy-saving plant or machinery that is unused and not second-hand,

(b) it is incurred on or after 1st April 2001, and

(2) Energy-saving plant or machinery means plant or machinery in relation to which the following conditions are met--

(a) when the expenditure is incurred, or

(b) when the contract for the provision of the plant or machinery is entered into.

(3) The conditions are that the plant or machinery--

(a) is of a description specified by Treasury order, and

(b) meets the energy-saving criteria specified by Treasury order for plant or machinery of that description.

(4) Any such order may make provision by reference to any technology list, or product list, issued by the Secretary of State (whether before or after the coming into force of this section).

45B Certification of energy-saving plant and machinery

(1) The Treasury may by order provide that, in such cases as may be specified in the order, no section 45A allowance may be made unless a relevant certificate of energy efficiency is in force.

A "section 45A allowance" means a first-year allowance in respect of expenditure that is first-year qualifying expenditure under section 45A.

(2) A certificate of energy efficiency is one certifying that--

(a) particular plant or machinery, or

(b) plant or machinery constructed to a particular design,

meets the energy-saving criteria specified in relation to that description of plant or machinery by order under section 45A.

(3) A relevant certificate of energy efficiency means one issued--

(a) by the Secretary of State or a person authorised by the Secretary of State;

(b) in the case of plant or machinery used or for use in Scotland, by the Scottish Ministers or a person authorised by them;

(c) in the case of plant or machinery used or for use in Wales, by the National Assembly for Wales or a person authorised by it;

(d) in the case of plant or machinery used or for use in Northern Ireland, by the Department of Enterprise, Trade and Investment in Northern Ireland or a person authorised by it.

(4) If a certificate of energy efficiency is revoked--

(a) the certificate is to be treated for the purposes of this section as if it had never been issued, and

(b) all such assessments and adjustments of assessments are to be made as are necessary as a result of the revocation.

(5) If a person who has made a tax return becomes aware that, as a result of the revocation of a certificate of energy efficiency after the return was made, the return has become incorrect, he must give notice to the Inland Revenue specifying how the return needs to be amended.

(6) The notice must be given within 3 months beginning with the day on which the person first became aware that anything in the tax return had become incorrect because of the revocation of the certificate.

45C Energy-saving components of plant or machinery

(1) This section applies for the purpose of apportioning expenditure incurred on plant or machinery if one or more components of the plant or machinery (but not all of it) is of a description specified by Treasury order under section 45A(3).

(2) If--

(a) only one of the components is of such a description, and

(b) an amount is specified by the order in respect of that component,

the part of the expenditure that is section 45A expenditure must not exceed that amount.

(3) If--

(a) more than one of the components are of such a description, and

(b) an amount is specified by the order in respect of each of those components,

the part of the expenditure that is section 45A expenditure must not exceed the total of those amounts.

(4) If the expenditure is treated under this Act as incurred in instalments, the proportion of each instalment that is section 45A expenditure is the same as the proportion of the whole of the expenditure that is section 45A expenditure.

(5) If this section applies, the expenditure is not apportioned under section 562(3) (apportionment where property sold with other property).

(6) In this section "section 45A expenditure" means expenditure that is first-year qualifying expenditure under section 45A. "

3 In section 46(1) of that Act (cases in which expenditure is not first-year qualifying expenditure), at the end add--

" , or

section 45A (expenditure on energy-saving plant or machinery). " .

4 In section 52(3) of that Act (amount of first-year allowances), in the Table, at the end add--

" Expenditure qualifying under section 45A (expenditure on energy-saving plant or machinery)

100% "

5 In the second column of the Table in section 98 of the Taxes Management Act 1970 (c. 9) (penalty for failure to provide information etc.), in the entry relating to requirements imposed by provisions of the Capital Allowances Act 2001 (c. 2) , after "43(5) and (6)," insert "45B(5) and (6),".

6 (1) For the purposes of section 45A(2) of the Capital Allowances Act 2001 (c. 2), if--

(a) expenditure on plant or machinery is incurred, or a contract for the provision of plant or machinery is entered into, before the first order is made under section 45A(3) of that Act; and

(b) if that order had been made before the relevant time, the conditions in section 45A(3) of that Act would have been met,

those conditions shall be treated as if they were met at the relevant time.

(2) In sub-paragraph (1) "the relevant time" means the time when the expenditure was incurred or (as the case may be) the contract was entered into.

Section 66.

SCHEDULE 18 Capital allowances: fixtures provided in connection with energy management services

1 In section 172(3) of the Capital Allowances Act 2001 (c. 2) (scope of Chapter 14 of Part 2)--

(a) for "195" substitute "195B"; and

(b) for "192" substitute "192A".

2 After section 175 of that Act insert--

" 175A Meaning of "energy services agreement"

(1) In this Chapter "energy services agreement" means an agreement entered into by an energy services provider ("the energy services provider") and another person ("the client") that makes provision, with a view to saving energy or using energy more efficiently, for--

(a) the design of plant or machinery, or one or more systems incorporating plant or machinery,

(b) obtaining and installing the plant or machinery,

(d) the maintenance of the plant or machinery, and

(e) the amount of any payments in respect of the operation of the plant or machinery to be linked (wholly or in part) to energy savings or increases in energy efficiency resulting from the provision or operation of the plant or machinery.

(2) In this Chapter "energy services provider" means a person carrying on a qualifying activity consisting wholly or mainly in the provision of energy management services. " .

3 In section 176(4) of that Act (treatment of fixture where expenditure incurred by person with interest in relevant land), for "section 177(4)" substitute "sections 177(4) and 180A(4)".

4 After section 180 of that Act insert--

" 180A Energy services providers

(1) If--

(a) an energy services agreement is entered into,

(b) the energy services provider incurs capital expenditure under the agreement on the provision of plant or machinery,

(d) at the time the plant or machinery becomes a fixture--

(i) the client has an interest in the relevant land, and

(ii) the energy services provider does not,

(e) the plant or machinery--

(i) is not provided for leasing, and

(ii) is not provided for use in a dwelling-house,

(f) the operation of the plant or machinery is carried out wholly or substantially by the energy services provider or a person connected with him,

(g) the energy services provider and the client are not connected persons, and

(h) they elect that this section should apply,

the energy services provider is to be treated, on and after the time at which he incurs the expenditure, as the owner of the fixture as a result of incurring the expenditure.

(2) But if the client would not have been entitled to a section 176 allowance in respect of the expenditure if he had incurred it, subsection (1) does not apply unless the plant or machinery belongs to a class of plant or machinery specified by Treasury order.

(3) In subsection (2) a "section 176 allowance" means an allowance to which a person is entitled as a result of section 176.

(4) If an election is made under this section, the client is not to be treated under section 176 as the owner of the fixture.

(5) An election under this section must be made by notice to the Inland Revenue--

(a) for income tax purposes, on or before the normal time limit for amending a tax return for the tax year in which the relevant chargeable period ends;

(b) for corporation tax purposes, no later than 2 years after the end of the relevant chargeable period.

(6) The "relevant chargeable period" means the chargeable period in which the capital expenditure was incurred. " .

5 In section 181(4) of that Act (purchaser of land giving consideration for fixture), for "section 182" substitute "sections 182 and 182A".

6 After section 182 of that Act insert--

" 182A Purchaser of land discharging obligations of client under energy services agreement

(1) If--

(a) after any plant or machinery has become a fixture, a person ("the purchaser") acquires an interest in the relevant land,

(b) that interest was in existence before the purchaser's acquisition of it,

(d) in connection with that acquisition, the purchaser pays a capital sum to discharge the obligations of the client under the energy services agreement,

the purchaser is to be treated, on and after the time of the acquisition, as the owner of the fixture as a result of incurring expenditure, consisting of that capital sum, on the provision of the fixture.

(2) Subsection (1) does not apply, and is to be treated as never having applied, if, immediately after the time of the acquisition, a person has a prior right in relation to the fixture.

(3) Section 181(3) (test for whether person has a prior right) applies for the purposes of subsection (2). " .

7 (1) Section 188 of that Act (cessation of ownership when person ceases to have qualifying interest) is amended as follows.

(2) In subsection (1), after paragraph (c) insert--

" (ca) section 182A (purchaser of land discharging obligations of client under energy services agreement), " .

(3) In subsection (3)(a), for "or 182" substitute ", 182 or 182A".

8 After section 192 of that Act insert--

" 192A Cessation of ownership of energy services provider

(1) This section applies if an energy services provider is treated under section 180A as the owner of a fixture.

(2) If--

(a) the energy services provider at any time assigns his rights under the energy services agreement, or

(b) the financial obligations of the client in respect of the fixture under an energy services agreement are at any time discharged (on the payment of a capital sum or otherwise),

the energy services provider is to be treated as ceasing to be the owner of the fixture at that time (or, as the case may be, the earliest of those times).

(3) The reference in subsection (2)(b) to the client is, in a case where the financial obligations of the client have become vested in another person (by assignment, operation of law or otherwise), a reference to the person in whom the obligations are vested when the capital sum is paid. " .

9 After section 195 of that Act insert--

" 195A Acquisition of ownership by assignee of energy services provider

(1) If section 192A(2)(a) applies (cessation of ownership of energy services provider as a result of assignment), the assignee is to be treated, on and after the assignment--

(a) as having incurred expenditure, consisting of the consideration given by him for the assignment, on the provision of the fixture, and

(b) as being the owner of the fixture.

(2) For the purposes of section 192A (and subsection (1) and section 195B) the assignee is to be treated as being an energy services provider who owns the fixture under section 180A.

195B Acquisition of ownership by client

(1) If section 192A(2)(b) applies (discharge of obligations of client) because the client has paid a capital sum, the client is to be treated--

(a) as having incurred expenditure, consisting of the capital sum, on the provision of the fixture, and

(b) as being, on and after the time of payment, the owner of the fixture.

(2) Section 192A(3) (assignee of client) applies in relation to subsection (1). " .

10 (1) Section 196 of that Act (disposal values in relation to fixtures) is amended as follows.

(2) In subsection (1), in the Table, after item 8 insert--

" 8A. Cessation of ownership of the fixture because section 192A(2)(a) (assignment of rights) applies.	The consideration given by the assignee for the assignment.
8B. Cessation of ownership of the fixture because section 192A(2)(b) (discharge of client's obligations) applies on the payment of a capital sum.	The capital sum paid to discharge the financial obligations of the client. "

(3) After subsection (4) insert--

" (4A) Section 192A(3) (assignee of client) applies in relation to item 8B of the Table. " .

(4) In subsection (5), for "192" substitute "192A".

11 In section 203(2)(b) of that Act (reasons for amendment of returns), after "182(2)" insert ", 182A(2)".

Section 67.

SCHEDULE 19 Capital allowances: conversion of parts of business premises into flats

Part 1 New Part 4A of the Capital Allowances Act 2001

After Part 4 of the Capital Allowances Act 2001 (c. 2) insert--

" Part 4A Flat conversion allowances

Chapter 1 Introduction

393A Flat conversion allowances

(1) Allowances are available under this Part if a person incurs qualifying expenditure in respect of a flat.

(2) Allowances under this Part are made to the person who--

(a) incurred the expenditure, and

(b) has the relevant interest in the flat.

(3) In this Part "flat" means a dwelling which--

(a) is a separate set of premises (whether or not on the same floor),

(b) forms part of a building, and

(4) In this Part "dwelling" means a building or part of a building occupied or intended to be occupied as a separate dwelling.

Chapter 2 Qualifying expenditure

393B Meaning of "qualifying expenditure"

(1) In this Part "qualifying expenditure" means capital expenditure incurred on, or in connection with--

(a) the conversion of part of a qualifying building into a qualifying flat,

(b) the renovation of a flat in a qualifying building if the flat is, or will be, a qualifying flat, or

(c) repairs to a qualifying building, to the extent that the repairs are incidental to expenditure within paragraph (a) or (b).

(2) Expenditure within subsection (1)(a) or (b) is not qualifying expenditure unless the part of the building, or the flat, in respect of which the expenditure is incurred--

(a) was unused, or

(b) was used only for storage,

throughout the period of one year ending immediately before the date on which the conversion or renovation work began.

(3) Expenditure is not qualifying expenditure if it is incurred on or in connection with--

(a) the acquisition of land or rights in or over land,

(b) the extension of a qualifying building (except to the extent required for the purpose of providing a means of getting to or from a qualifying flat),

(d) the provision of furnishings or chattels.

(4) For the purposes of this section, expenditure incurred on repairs to a building is to be treated as capital expenditure if it is not expenditure that would be allowed to be deducted in calculating the profits of a Schedule A business for tax purposes.

(5) Treasury regulations may make further provision as to expenditure which is, or is not, qualifying expenditure.

Chapter 3 Qualifying buildings and qualifying flats

393C Meaning of "qualifying building"

(1) In this Part "qualifying building" means a building in respect of which the following requirements are met--

(a) all or most of the ground floor of the building must be authorised for business use,

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