Taxes Consolidation Act, 1997 (Number 39 of 1997)
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769B Annual allowances for capital expenditure on purchase of capacity rights.
(1) Where, on or after 1 April 2000, a company incurs [2]>capital expenditure<[2][2]>qualifying expenditure<[2] on the purchase of capacity rights, there shall, subject to and in accordance with this Chapter, be made to that company writing-down allowances, in respect of that expenditure during the writing-down period; but no writing-down allowance shall be made to a company in respect of any expenditure unless—
(a) the allowance is to be made to the company in taxing the company’s trade, or
(b) any income receivable by the company in respect of the rights would be liable to tax.
(2) (a) Subject to paragraph (c), the writing-down period shall be—
(i) a period of 7 years, or
(ii) where the capacity rights are purchased for a specified period which exceeds 7 years, the number of years for which the capacity rights are purchased,
commencing with the beginning of the accounting period related to the expenditure.
(b) For the purposes of this section, writing-down allowances shall be determined by the formula—
A |
× |
B |
|
C |
where—
A is the amount of the [3]>capital expenditure<[3][3]>qualifying expenditure<[3] incurred on the purchase of the capacity rights,
B is the length of the part of the chargeable period falling within the writing-down period, and
C is the length of the writing-down period.
(c) For the purposes of this subsection, any expenditure incurred for the purposes of a trade by a company about to carry on the trade shall be treated as if that expenditure had been incurred by that company on the first day on which that company carries on the trade unless before that day the company has sold all the capacity rights on the purchase of which the expenditure was incurred.
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(3) (a) Notwithstanding any other provisions of this Chapter, where a company (in this paragraph referred to as the “buyer”) incurs qualifying expenditure on the purchase from another company (in this paragraph referred to as the “seller”) of capacity rights, no allowances shall be made under this Chapter to the buyer in respect of that expenditure if both companies are companies within a group of companies, unless an allowance had been made under this Chapter to the seller (or would have been made to the seller if it had not sold those rights) in respect of the capital expenditure it incurred on the purchase of those rights.
(b) For the purposes of this subsection—
(i) a “group of companies” means a company and any other companies of which it has control or with which it is associated, and
(ii) a company is associated with another company where it could reasonably be considered that—
(I) any person or any group of persons or groups of persons having a reasonable commonality of identity has or have, as the case may be, or had the means or power, either directly or indirectly, to determine the trading operations carried on or to be carried on by both companies, or
(II) both companies are under the control of any person or any group of persons or groups of persons having a reasonable commonality of identity.
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[2]
Substituted by FA03 s20(1)(b)(i). This section applies as on and from the date of 28 March 2003
[3]
Substituted by FA03 s20(1)(b)(i). This section applies as on and from the date of 28 March 2003
[4]
Inserted by FA03 s20(1)(b)(ii). This section applies as on and from the date of 28 March 2003