Promotion of Investments Act 1986 s 18

s 18 Capital allowances

(1) The income of a pioneer company in respect of its pioneer business falling to be ascertained in accordance with this Act for any accounting period shall be so ascertained (after making any necessary adjustments in consequence of a direction under section 17) after deducting allowances which fall to be made under Schedule 3 to the principal Act notwithstanding that no claim for such allowances have been made: Provided that where plant or machinery is used directly or indirectly for the purposes of storage, treatment or disposal of scheduled wastes as defined in the Environmental Quality (Scheduled Wastes) Regulations 1989 by a pioneer company for the purposes of its pioneer business, any capital expenditure incurred during the tax relief period by the pioneer company in respect of that plant or machinery shall for the purposes of Schedule 3 of the principal Act be deemed to have been incurred on the day following the end of the tax relief period. (2) (Deleted by Act A751). (3) Subject to paragraph (6)(b)— (a) where an asset is used for the purposes of the pre-pioneer business of a pioneer company and continues to be used for the purposes of the pioneer business of that pioneer company— (i) the residual expenditure as at the end of the basis period for the year of assessment immediately prior to the year of assessment in the basis period in which the day of commencement of the pioneer business falls shall, in respect of that pioneer business and for the purposes of Schedule 3 to the principal Act, be deemed to be the residual expenditure of that asset on the day of commencement of that pioneer business; and (ii) any capital expenditure incurred by that pioneer company in respect of that asset during the basis period in which the date of cessation of that prepioneer business falls shall, for the purposes of Schedule 3 to the principal Act, be deemed to have been incurred on the day of commencement of that pioneer business; (b) where an asset is used for the purposes of the pioneer business of a pioneer company and continues to be used for the purposes of the post-pioneer business of that pioneer company— (i) the residual expenditure as at the end of the basis period for the year of assessment immediately prior to the year of assessment in the basis period in which the day of commencement of the post-pioneer business falls shall, in respect of that post-pioneer business and for the purposes of Schedule 3 to the principal Act, be deemed to be the residual expenditure of that asset on the day of commencement of that post-pioneer business; and (ii) any capital expenditure incurred by that pioneer company in respect of that asset during the basis period in which the date of cessation of that pioneer business falls shall, for the purposes of Schedule 3 to the principal Act, be deemed to have been incurred on the day of commencement of that postpioneer business. (4) (Deleted by Act A751). (5) Notwithstanding paragraph 75 of Schedule 3 to the principal Act, where an asset is used for the purposes of the pre-pioneer business of a pioneer company and by reason of an insufficiency or absence of adjusted income from that pre-pioneer business for the year of assessment immediately prior to the year of assessment in the basis period in which the day of commencement of the pioneer business falls, effect cannot be given or cannot be given in full to any allowance or to the aggregate amount of any allowances in respect of the asset falling to be made to the company for that year in relation to that pre-pioneer business, that allowance or that aggregate amount, as the case may be, shall be deemed to be an allowance to be made to the company in relation to its pioneer business for the year of assessment in the basis period in which the day of commencement of the pioneer business falls. (6) Where in a case to which subsections (1) and (3) apply, an asset used for the purposes of a promoted activity or producing a promoted product is also used for the purposes of an activity or producing a product which activity or product is not a promoted activity or promoted product or which activity or product is a promoted activity or promoted product in respect of which the company has been granted pioneer status and whose tax relief period has expired— (a) there shall be made under Schedule 3 to the principal Act in respect of any capital expenditure on the asset such a deduction as is reasonable having regard to the extent to which the asset is used for the purposes of that secondmentioned activity or product; and (b) the residual expenditure arrived at under paragraph (3)(a) or (3)(b) shall be reduced by the amount of any deduction made under paragraph (a). (7) For the avoidance of doubt it is hereby declared that where an asset is used for the purposes of the pioneer business of a pioneer company and by reason of an insufficiency or absence of adjusted income from that pioneer business for the year of assessment immediately prior to the year of assessment in the basis period in which the day of commencement of the post-pioneer business falls, effect cannot be given or cannot be given in full to any allowance or to the aggregate amount of any allowances in respect of the asset falling to be made to the company for that year in relation to that pioneer business, that allowance or that aggregate amount, as the case may be, shall not be deemed to be an allowance to be made to the company in relation to its post-pioneer business for the year of assessment in the basis period in which the day of commencement of the post-pioneer business falls or any subsequent year of assessment.