Revenue Note for Guidance

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Revenue Note for Guidance

372AY Capital allowances in relation to the construction or refurbishment of certain tourism infrastructure facilities

Summary

This section provides for accelerated capital allowances over 7 years in relation to certain tourism infrastructure facilities. The section defines the “qualifying premises” involved and provides that the tax life and holding period of such premises will be 15 years.

Details

Qualifying tourism infrastructure facilities

(1) The type of building or structure to which the section applies is defined. Such “qualifying premises” must be a building or structure:

  1. the site of which is wholly within a qualifying mid-Shannon area,
  2. which apart from this section is not an industrial building or structure within the meaning of section 268 or deemed to be such a building or structure. This provision therefore rules out any building or structure which already qualifies for capital allowances by virtue of section 268 e.g. registered hotels, guesthouses, holiday hostels and caravan and camping sites;
  3. which is in use for the purposes of the operation of one or more qualifying tourism infrastructure facilities (these are the classes of facilities selected by the Minister for Arts, Sport and Tourism and published in the relevant guidelines);
  4. which is not a licensed premises (as defined in section 2 of the Intoxicating Liquor Act 1988), but which may be a restaurant (as defined in section 6 of that Act) which has a wine retailer’s on-licence or a special restaurant licence;
  5. which is not a facility in which gambling, gaming or wagering of any sort is carried on for valuable consideration or which supports the carrying on of such activities,
  6. in relation to which relevant data has been provided to the mid-Shannon Tourism Infrastructure Board for onward transmission to the Minister and the Minister for Finance in relation to:
    • the amount of the capital expenditure actually incurred in the qualifying period on the construction or refurbishment of the building or structure, and in relation to an accommodation building, the amount of such expenditure which is eligible for certification (see subsection (4) of section 372AW),
    • the number and nature of the investors that are investing in the building or structure,
    • the amount to be invested by each investor, and
    • the nature of the structures which are being put in place to facilitate the investment in the building or structure,
    together with any other information specified in the relevant guidelines as being of assistance to the Minister for Finance in evaluating the costs and the benefits arising from the operation of tax relief for buildings and structures under this Chapter, and
  7. in respect of which the mid-Shannon Tourism Infrastructure Board gives a certificate in writing after the building or structure is first used or, where capital expenditure is incurred on the refurbishment of a building or structure, first used subsequent to the incurring of that expenditure—
    • stating that it is satisfied that the conditions in paragraphs (a) to (f) above have been met,
    • confirming the date of first use or, as the case may be, first use after refurbishment, and
    • which includes certification in accordance with section 372AW(2)(a)(ii) or a copy of such certification if it was already issued.

Application of industrial buildings’ provisions

(2)(a) The industrial buildings allowances provisions of Chapter 1 of Part 9 are applied in relation to capital expenditure incurred on the construction or refurbishment of premises which qualify under the section. The application of Chapter 1 of Part 9 – subject to paragraph (b), to subsections (3) to (5) of the section and to section 372AZ – is:

  • as if the qualifying premises were a mill or factory under section 268(1)(a), and
  • as if any non-trading activity carried on in the qualifying premises were a trade. This provision is a mechanism to ensure that the technical rules for entitlement to industrial buildings allowances apply and does not affect the nature of the actual income which arises from the qualifying premises.

(2)(b) The application of the subsection is confined to capital expenditure incurred in the qualifying period.

Minimum spend in refurbishment cases

(3) In the case of refurbishment, a minimum of 20 per cert of the market value of a building or structure must be expended in the qualifying period to qualify.

Rate of allowances, tax life and holding period

(4) This provision sets out how the application, by subsection (2), of the provisions of Chapter 1 of Part 9 in relation to capital expenditure incurred on the construction or refurbishment of a qualifying premises is to apply in the case of sections 272 and 274.

(4)(a) Section 272 is to apply:

  • as if a revised subsection (3)(a) were inserted – this provides that capital expenditure incurred in the qualifying period in relation to a qualifying premises is to be written off at the rate of 15 per cent per annum, and
  • as if a revised subsection (4)(a) were inserted – this provides that the tax life of a qualifying premises is to be 15 years from first use or first use after refurbishment.

(4)(b) Section 274(1)(b) is to apply as if a revised subparagraph (i) were inserted. This provides that the holding period of a qualifying premises for balancing allowance and balancing charge purposes is to be 15 years from first use or first use after refurbishment.

Expenditure attributable to work actually carried out

(5) Capital expenditure is to be treated as incurred in the qualifying period to the extent that it is attributable to work actually carried out in the qualifying period.

Relevant Date: Finance Act 2019