Introduction Capital allowances
57.Paragraph 13(1) explains that paragraphs 14 to 17 set out the treatment of alternative finance investment bonds for the purposes of the capital allowances legislation.
58.Paragraph 14 sets out the treatment for capital allowances purposes of plant and machinery or industrial buildings used for alternative finance investment bonds.
59.Sub-paragraph (1) provides that paragraph 14 applies to transactions falling within the conditions A to C set out in paragraph 5.
60.Sub-paragraph (2) provides that paragraph 14 only applies to assets that are either plant or machinery or an industrial building (or part of an industrial building).
61.Sub-paragraph (3)(a) provides that the expenditure by Q on acquiring the asset is not capital expenditure for the purposes of CAA.
62.Sub-paragraph (3)(b) provides that, for the purposes of CAA, Q is not treated as becoming the owner of the asset, instead P is to be regarded as continuing to be the owner of the asset.
63.Sub-paragraphs (4) and (5) provide that the treatment of the assets for the purposes of CAA is not affected by the leaseback agreement entered into by Q and P nor by the second transaction.
64.Paragraph 15 provides rules for the case where the asset held for the purposes of the bond is lost or destroyed.
65.Sub-paragraph (2) states that the first condition is that the asset is plant or machinery that was part of the subject matter of the first transaction.
66.Sub-paragraph (3) states that the second condition is that, whilst the asset is held as a bond asset, it is either permanently lost or ceases to exist.
67.Sub-paragraph (4) provides that if the conditions are met then for the purposes of CAA there is a disposal event for P in the period in which the loss occurs or the asset ceases to exist.
68.Sub-paragraph (5) sets out the disposal value that P is required to bring into account for the purposes of CAA.
69.Paragraph 16 sets out the treatment for the purposes of CAA where Q retains the asset, but no longer holds it as a bond asset.
70.Sub-paragraph (2) states that the first condition is that the asset is plant or machinery, or an industrial building (or part of an industrial building), that was part of the subject matter of the first transaction.
71.Sub-paragraph (3) states that the second condition is that Q retains the asset after ceasing to hold the asset as a bond asset.
72.Sub-paragraph (4) states that where the conditions are satisfied, Q is treated for the purposes of CAA as becoming the owner of the asset and P is treated as ceasing to be the owner of the asset.
73.Sub-paragraph (5) states that in the chargeable period for P in which Q ceases to hold the asset as a bond asset, P is treated as having disposed of the asset.
74.Sub-paragraph (6)(a) states that P is required to bring into account as the disposal value, the market value of the plant or machinery at the time of the transfer.
75.Sub-paragraph (6)(b) states that P is treated as receiving as the proceeds of the balancing event, for the purposes of industrial buildings allowances, the market value of the asset.
76.Paragraph 17 sets out the treatment for the purposes of CAA where Q transfers the asset to a third person.
77.Sub-paragraph (2) states that the first condition is that the asset is plant or machinery, or an industrial building (or part of an industrial building), that was part of the subject matter of the first transaction.
78.Sub-paragraph (3) states that the second condition is that Q transfers the asset to any other person than P.
79.Sub-paragraph (4) states that at the time that Q transfers the asset, the other person is treated for the purposes of CAA as becoming the owner of the asset and P is treated as ceasing to be the owner of the asset.
80.Sub-paragraph (5) states that in the chargeable period for P in which Q ceases to hold the asset as a bond asset, P is treated as having a disposal event in respect of plant or machinery or a balancing event in respect of an industrial building (or part of an industrial building).
81.Sub-paragraph (6)(a) states that P is required to bring into account as the disposal value, the market value of the plant or machinery at the time of the transfer.
82.Sub-paragraph (6)(b) states that P is treated as receiving as the proceeds of the balancing event, for the purposes of industrial buildings allowances, the market value of the asset.