271 Industrial building allowances

Summary

This section provides for the granting of an industrial building allowance (commonly referred to as an “initial allowance”) to a person who incurs capital expenditure on the construction (including, by virtue of section 270, refurbishment) of certain industrial buildings or structures. For the allowance to apply, the building or structure must be one which is to be occupied for the purposes of a trade to be carried on by the person who incurred the expenditure or by a qualifying lessee. A qualifying lessee is one who occupies the building or structure under a lease (called a “relevant lease”) to which the relevant interest in the building is reversionary or under a lease to which a relevant lease granted to an industrial development agency is reversionary.

The industrial building (initial) allowance is given for the chargeable period related to the expenditure or, where a lessee is involved, the chargeable period related to the commencement of the tenancy by an industrial user of the building or structure or, where an industrial development agency takes the first lease of the building or structure, the chargeable period related to the commencement of the tenancy of the agency.

The allowance is available for expenditure incurred on the construction (including, by virtue of section 270, refurbishment) of —

• industrial buildings or structures provided for use for the purposes of certain trades carried on in the Shannon Airport Area or the Custom House Docks Area, and
• industrial buildings or structures provided for the purposes of certain projects approved by an industrial development agency before certain specified dates, subject to the actual expenditure being incurred before stated dates.

The rates of allowance are —

• in the case of a building or structure which is to be used for the purposes of a trade carried on in a mill, factory, etc, or in a mineral laboratory, or for the purposes of a dock undertaking, 50 per cent of the capital expenditure incurred on the building or structure,
• in the case of a building or structure which is to be used for the purposes of a trade of market gardening or the intensive production of cattle, etc, 20 per cent of the capital expenditure incurred on the building or structure, and
• in any other case, 10 per cent of the capital expenditure incurred on the building or structure.

Details

Definitions

(1) “industrial development agency” is the Industrial Development Authority, Shannon Free Airport Development Company Limited or Údarás na Gaeltachta.

“appropriate chargeable period” is the chargeable period (defined in section 321 as an accounting period of a company or a year of assessment) for which the industrial building allowance will be granted. This will be —

• the chargeable period related to the expenditure, that is, in the case of corporation tax, the accounting period in which the expenditure was incurred and, in the case of income tax, the year of assessment in the basis period (see section 306) for which the expenditure was incurred, or
• if later, the chargeable period related to the commencement of a tenancy by an industrial user of the building or structure or, in a case where an industrial development agency takes the first lease of the building or structure, the chargeable period related to the commencement of that tenancy. [The chargeable period related to the commencement of a tenancy is, in the case of corporation tax, the accounting period in which the tenancy commences and, in the case of income tax, the year of assessment in the basis period (see section 306) for which the tenancy commenced.]

“relevant lease” is a lease to which the relevant interest is reversionary.

Conditions for allowance

(2)(a) The industrial building (initial) allowance is given for the appropriate chargeable period where capital expenditure is incurred on the construction (including, by virtue of section 270, refurbishment) of a qualifying industrial building or structure which is to be occupied for the purposes of a trade by the person incurring the expenditure or by a qualifying lessee.

(2)(b) A qualifying lessee is a lessee who occupies the building or structure under a relevant lease (that is, a lease to which the relevant interest in the building or structure is reversionary) or under a lease to which a relevant lease granted to an industrial development agency is reversionary.

(3) A qualifying industrial building or structure is one which is provided —

• before 23 April, 1996 for use for the purposes of relevant trading operations carried on by companies in the Shannon Airport Area (section 445) or the Custom House Docks Area (section 446); but, in the case of capital expenditure incurred on or after 6 May 1993, excluding any building or structure provided by a lessor to a lessee other than where the letting is part of those relevant trading operations,
• by a company on or after 23 April 1996 for use for the purposes of such relevant trading operations carried on by the company, excluding any building or structure provided by a lessor to a lessee other than where the letting is part of those relevant trading operations,
• for a project approved by an industrial development agency on or before 31 December 1988 and in respect of the provision of which expenditure was incurred before 31 December 1995 or, in a case where the project was so approved in the period from 1 January 1986 to 31 December 1988, before 31 December 1996, or
• for a project approved for grant assistance by an industrial development agency in the period from 1 January 1989 to 31 December 1990 and in respect of the provision of which expenditure is incurred before 31 December 1997 (or before 30 June 1998 where a legal dispute gave rise to a delay) or, in a case where the project is on an approved list for “section 130” loan financing, before 31 December 2002.

Rates of allowance

(4) The rates of industrial building (initial) allowance for capital expenditure incurred on the construction (including, by virtue of section 270, refurbishment) of a qualifying industrial buildings or structures are —

• in the case of a building or structure which is to be used for the purposes of a trade carried on in a mill, factory, etc, or in a mineral laboratory, or for the purposes of a dock undertaking, 50 per cent of the capital expenditure incurred on the building or structure; but, in the case of such buildings or structures provided for the purposes of relevant trading operations carried on by companies in the Shannon Airport Area (section 445) or the Custom House Docks Area (section 446), this rate only applies where the capital expenditure is incurred before 25 January 1999,
• in the case of a building or structure to be used for the purposes of a trade of market gardening or the intensive production of cattle, etc, 20 per cent of the capital expenditure incurred on the building or structure, and
• in any other case, 10 per cent of the capital expenditure incurred on the building or structure.

Non-availability of writing-down allowance or increased writing-down allowance

(5) Where an industrial building (initial) allowance is given for any chargeable period in respect of capital expenditure incurred on an industrial building or structure provided for the purposes of a project approved for grant assistance by an industrial development agency in the period from 1 January 1989 to 31 December 1990, a writing-down allowance under section 272 in respect of that expenditure will not be given for the same chargeable period. In addition, any writing-down allowance in respect of that expenditure for a later chargeable period may not be increased under section 273.

Withdrawal of industrial building allowance

(6) An industrial building (initial) allowance is not given in respect of any expenditure on a building or structure if, when the building or structure comes to be used, it is not an industrial building or structure. If an allowance has been given in respect of expenditure on any such building or structure, the allowance may be withdrawn by way of an amended assessment.

Relevant Date: Finance Act 2019