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HMRC internal manual

Tonnage Tax Manual

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Schedule 22 Finance Act 2000: Part XI offshore activities - Para 112 capital allowances - notional qualifying expenditure - existing assets

FA00/SCH22/PARA112

(1) This paragraph applies to determine the amount of notional qualifying expenditure for the purposes of paragraph 110 where the company was entitled before entry into tonnage tax to capital allowances in respect of expenditure on providing the asset.

(2) If the asset was brought into use for the purposes of the company’s offshore activities immediately on entry into tonnage tax, the notional qualifying expenditure is equal to any unrelieved qualifying expenditure attributable to the asset.

(3) In this paragraph “unrelieved qualifying expenditure” means the unrelieved qualifying expenditure that would otherwise have been carried forward under Chapter 5 of Part 2 of the Capital Allowances Act 2001.

(4) The amount of unrelieved qualifying expenditure attributable to plant or machinery in a class pool, or the main pool, is the proportion of the whole given by:

AV ÷ PV

where:

AV is the market value of the asset concerned immediately before entry into tonnage tax, and

PV is the aggregate market value at that time of all the assets in the pool.

(5) References in this paragraph to unrelieved qualifying expenditure include qualifying expenditure to the extent to which it is unrelieved by virtue of notice having been given under section 130 of the Capital Allowances Act 2001(notice postponing first-year or writing-down allowance).

(6) If the asset was not brought into use for the purposes of the company’s offshore activities immediately on entry into tonnage tax, the notional qualifying expenditure is the amount given by sub-paragraph (2) but written down in respect of the period between the company’s entry into tonnage tax and the asset being brought into use for those purposes.

(7) The Inland Revenue shall make provision by regulations as to the basis on which the writing down mentioned in sub-paragraph (6) is to be done.

The regulations may make different provision for different descriptions of asset.

History

Amended by Schedule 2 CAA 2001. Up to 31st March 2001 subparagraphs 3 and 5 read:

(3) For the purposes of this paragraph “unrelieved qualifying expenditure” means the balance that would otherwise have been carried forward under Part II of the Capital Allowances Act 1990.

(5) References in this paragraph to unrelieved qualifying expenditure include qualifying expenditure to the extent to which it is unrelieved by virtue of notice having been given under-

(a) section 30(1) of the Capital Allowances Act 1990 (postponement or reduction of first year allowances), or

(b) section 31(3) of that Act (postponement of writing-down allowance in respect of expenditure in single ship pool).

References

Assets held before entry TTM11310