Finance Bill - continued        House of Lords
SCHEDULE 22, TONNAGE TAX - continued

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  PART VI
  RELEVANT SHIPPING PROFITS
 
Introduction
     44. - (1) For the purposes of this Schedule the relevant shipping profits of a tonnage tax company are-
 
 
    (a) its relevant shipping income (as defined below), and
 
    (b) so much of its chargeable gains as is effectively excluded from the charge to tax by the provisions of Part VIII of this Schedule.
      (2) The "relevant shipping income" of a tonnage tax company means-
 
 
    (a) its income from tonnage tax activities (see paragraphs 45 to 48), and
 
    (b) any income that is relevant shipping income under-
 
      paragraph 49 (distributions of overseas shipping companies), or
 
      paragraph 50 (certain interest etc.),
 
    but subject to paragraph 51 (general exclusion of investment income).
 
Tonnage tax activities
     45. - (1) References in this Schedule to the "tonnage tax activities" of a tonnage tax company are to-
 
 
    (a) its core qualifying activities (see paragraph 46),
 
    (b) its qualifying secondary activities to the extent that they do not exceed the permitted level (see paragraph 47), and
 
    (c) its qualifying incidental activities (see paragraph 48).
      (2) Sub-paragraph (1) has effect subject to paragraph 51(2) (exclusion of activities giving rise to investment income).
 
 
Core qualifying activities
     46. - (1) A tonnage tax company's "core qualifying activities" are-
 
 
    (a) its activities in operating qualifying ships, and
 
    (b) other ship-related activities that are a necessary and integral part of the business of operating its qualifying ships.
      (2) A company's activities in operating qualifying ships means the activities mentioned in paragraph 19(1)(a) to (d) by virtue of which the ship is a qualifying ship.
 
 
Qualifying secondary activities
     47. - (1) The Inland Revenue may make provision by regulations as to-
 
 
    (a) the descriptions of activity that are to be regarded as qualifying secondary activities, and
 
    (b) the permitted level in relation to any such activity or description of activity.
      (2) The regulations may set the permitted level or provide for its determination by reference to such factors as may be specified in the regulations.
 
 
Qualifying incidental activities
     48. - (1) A company's incidental activities means its ship-related activities that-
 
 
    (a) are incidental to its core qualifying activities, and
 
    (b) are not qualifying secondary activities.
      (2) If the turnover in an accounting period of the company from its incidental activities (taken together) does not exceed 0.25% of the company's turnover in that period from-
 
 
    (a) its core qualifying activities, and
 
    (b) its qualifying secondary activities to the extent that they do not exceed the permitted level,
       the company's incidental activities in that period are qualifying incidental activities.
 
 
Relevant shipping income: distributions of overseas shipping companies
     49. - (1) Income of a tonnage tax company consisting in a dividend or other distribution of an overseas company is relevant shipping income if the following conditions are met.
 
      (2) The conditions are-
 
 
    (a) that the overseas company operates qualifying ships;
 
    (b) that more than 50% of the voting power in the overseas company is held by a company resident in a member State, or that two or more companies each of which is resident in a member State hold in aggregate more than 50% of that voting power;
 
    (c) that the 75% limit is not exceeded in relation to the overseas company in any accounting period in respect of which the distribution is paid;
 
    (d) that all the income of the overseas company is such that, if it were a tonnage tax company, it would be relevant shipping income;
 
    (e) that the distribution is paid entirely out of profits arising at a time when-
 
      (i) the conditions in paragraphs (a) to (d) were met, and
 
      (ii) the tonnage tax company was subject to tonnage tax; and
 
    (f) the profits of the overseas company out of which the distribution is paid are subject to a tax on profits (in the country of residence of the company or elsewhere, or partly in that country and partly elsewhere).
      (3) For the purposes of sub-paragraph (2)(c) the "75% limit" is the requirement set out in paragraph 37 (requirement that not more than 75% of tonnage is chartered in) as it applies to a single company.
 
      (4) In this paragraph an "overseas company" means a company that is not resident in the United Kingdom.
 
 
Relevant shipping income: certain interest etc.
     50. - (1) Income to which this paragraph applies is relevant shipping income only to the extent that it would apart from this Schedule fall to be taken into account as trading income from a trade consisting of the company's tonnage tax activities.
 
      (2) This paragraph applies to-
 
 
    (a) anything giving rise to a credit that would fall to be brought into account for the purposes of Chapter II of Part IV of the Finance Act 1996 (loan relationships);
 
    (b) any exchange gain under Chapter II of Part II of the Finance Act 1993 (exchange gains and losses); and
 
    (c) any profit on a qualifying contract under Chapter II of Part IV of the Finance Act 1994 (interest rate and currency contracts).
 
General exclusion of investment income
     51. - (1) Income from investments is not relevant shipping income.
 
      (2) To the extent that an activity gives rise to income from investments it is not regarded as part of a company's tonnage tax activities.
 
      (3) For the purposes of this paragraph "income from investments" includes-
 
 
    (a) any income chargeable to tax under Schedule A or Case III of Schedule D, and
 
    (b) any equivalent foreign income.
      (4) "Equivalent foreign income" means income chargeable under Case V of Schedule D that-
 
 
    (a) consists in income of an overseas property business, or
 
    (b) is equivalent to a description of income chargeable to tax under Case III of Schedule D but arises from a possession outside the United Kingdom.
      (5) Sub-paragraph (1) above does not affect income that is relevant shipping income under-
 
 
    paragraph 49 (distributions of overseas shipping companies), or
 
    paragraph 50 (certain interest etc.).
  PART VII
  THE RING FENCE: GENERAL PROVISIONS
 
Accounting period ends on entry or exit
     52. An accounting period ends (if it would not otherwise do so) when a company enters or leaves tonnage tax.
 
 
Tonnage tax trade
     53. - (1) The tonnage tax activities of a tonnage tax company are treated for corporation tax purposes as a separate trade (the company's "tonnage tax trade") distinct from all other activities carried on by the company.
 
      (2) Sub-paragraph (1) shall not be read as requiring a company to be treated-
 
 
    (a) as setting up and commencing a new trade on entry into tonnage tax, or
 
    (b) as permanently ceasing to carry on a trade on leaving tonnage tax.
 
Profits of controlled foreign companies
     54. - (1) A tonnage tax company is not subject to any liability under section 747 of the Taxes Act 1988 in any accounting period in respect of profits of a controlled foreign company if in that period distributions of the controlled foreign company made to the tonnage tax company would be relevant shipping income of the latter (see paragraph 49).
 
      (2) Schedule 24 to that Act (assumptions for calculating chargeable profits of controlled foreign companies) has effect subject to the following provisions.
 
      (3) If a company in relation to which that Schedule applies-
 
 
    (a) is a member of a tonnage tax group, and
 
    (b) is a tonnage tax company by virtue of the group's tonnage tax election, or would be if it were within the charge to corporation tax,
       it shall be assumed for the purposes for which that Schedule applies to be a single company that is a tonnage tax company.
 
      (4) Nothing in paragraph 5(1) of that Schedule (controlled foreign company assumed not to be member of a group) affects sub-paragraph (3) above.
 
  For accounting periods ending before 1st April 2000 the reference to paragraph 5(1) has effect as a reference to paragraph 5 of that Schedule.
 
      (5) Paragraph 20 of that Schedule (provisions for avoiding double charge) does not apply where, or to the extent that, the transaction in question is one any profits from which would be, or would be reflected in, relevant shipping profits of a party to the transaction.
 
 
General exclusion of reliefs, deductions and set-offs
     55. No relief, deduction or set-off of any description is allowed against the amount of a company's tonnage tax profits.
 
 
Exclusion of loss relief
     56. - (1) When a company enters tonnage tax, any losses that have accrued to it before entry and are attributable-
 
 
    (a) to activities that under tonnage tax become part of the company's tonnage tax trade, or
 
    (b) to a source of income that under tonnage tax becomes relevant shipping income,
       are not available for loss relief in any accounting period beginning on or after the company's entry into tonnage tax.
 
      (2) Any apportionment necessary to determine the losses so attributable shall be made on a just and reasonable basis.
 
      (3) In sub-paragraph (1) "loss relief" includes any means by which a loss might be used to reduce the amount in respect of which that company, or any other company, is chargeable to tax.
 
 
Exclusion of relief or set-off against tax liability
     57. - (1) Any relief or set-off against a company's tax liability for an accounting period does not apply in relation to-
 
 
    (a) so much of that tax liability as is attributable to the company's tonnage tax profits, or
 
    (b) so much of that tax liability as is attributable to tonnage profits of a controlled foreign company apportioned to the company under section 747(3) of the Taxes Act 1988.
      (2) Relief to which this paragraph applies includes, but is not limited to, any relief or set-off under-
 
 
    (a) section 788 or 790 of the Taxes Act 1988 (double taxation relief), or
 
    (b) regulations under section 32 of the Finance Act 1998 (unrelieved surplus advance corporation tax).
      (3) Sub-paragraph (1)(b) applies whether or not the company to which the profits are apportioned is subject to tonnage tax.
 
      (4) For the purposes of sub-paragraph (1)(b)-
 
 
    (a) "tonnage profits" means so much of the chargeable profits of the controlled foreign company as, on the assumptions in Schedule 24 to the Taxes Act 1988, are calculated in accordance with paragraph 4 of this Schedule; and
 
    (b) so much of a controlled foreign company's chargeable profits for any accounting period as are tonnage profits shall be treated as apportioned under section 747(3) of that Act in the same proportions as those chargeable profits (taken generally) are apportioned.
      (5) For the purposes of any such regulations as are mentioned in sub-paragraph (2)(b), a company's tonnage tax profits shall be left out of account in determining the company's profits charged to corporation tax.
 
  This does not affect the computation under those regulations of shadow ACT on distributions made by a tonnage tax company, whether paid out of tonnage tax profits or other profits.
 
      (6) This paragraph does not affect-
 
 
    (a) any reduction under section 13(2) of the Taxes Act 1988 (marginal small companies' relief), or
 
    (b) any set off under section 7(2) or 11(3) of the Taxes Act 1988 (set off for income tax borne by deduction).
 
Transactions not at arm's length: between tonnage tax company and another person
     58. - (1) In relation to provision made or imposed as between a tonnage tax company and another person by a transaction or series of transactions that-
 
 
    (a) falls in relation to the tonnage tax company to be regarded as made or imposed in the course of, or with respect to, its tonnage tax trade, and
 
    (b) does not fall in relation to the other person to be regarded as made or imposed in the course of, or with respect to, a tonnage tax trade carried on by that person,
       Schedule 28AA to the Taxes Act 1988 (transactions not at arm's length) has effect with the omission of paragraphs 5(2) to (6), 6 and 7 (exclusion of intra-UK transactions).
 
      (2) Expressions used in Schedule 28AA have the same meaning in this paragraph.
 
      (3) Nothing in this paragraph affects the computation of a company's tonnage tax profits.
 
 
Transactions not at arm's length: between tonnage tax trade and other activities of same company
     59. - (1) Schedule 28AA of the Taxes Act 1988 (transactions not at arm's length) applies to provision made or imposed as between a company's tonnage tax trade and other activities carried on by it as if-
 
 
    (a) that trade and those activities were carried on by two different persons,
 
    (b) the provision were made or imposed between those persons by means of a transaction, and
 
    (c) the two persons were both controlled by the same person at the time of the making or imposition of the provision.
      (2) As applied by sub-paragraph (1), Schedule 28AA has effect with the omission of paragraphs 5(2) to (6), 6 and 7 (exclusion of intra-UK transactions).
 
      (3) Expressions used in Schedule 28AA have the same meaning in this paragraph.
 
      (4) Nothing in this paragraph affects the computation of a company's tonnage tax profits.
 
 
Transactions not at arm's length: duty to give notice
     60. - (1) Not more than 90 days after-
 
 
    (a) the making of an election under this Schedule, or the occurrence of any other event, as a result of which a company enters, or is taken to have entered, tonnage tax, or
 
    (b) the making of an election under this Schedule as a result of which a company will become a tonnage tax company at a later date,
       the company shall give notice under this paragraph to any person whose tax liability may be affected by paragraph 58 (transactions not at arm's length).
 
      (2) The notice must state-
 
 
    (a) that the company has become a tonnage tax company, or
 
    (b) that an election has been made under this Schedule as a result of which the company will become a tonnage tax company,
       and inform the person to whom it is given of the possible application of the provisions of Schedule 28AA in relation to transactions between the company and that person.
 
 
Treatment of finance costs: single company
     61. - (1) This paragraph applies to a tonnage tax company which is a single company carrying on tonnage tax activities and other activities.
 
      (2) An adjustment shall be made if it appears, in relation to an accounting period of the company, that the company's deductible finance costs outside the ring fence exceed a fair proportion of the company's total finance costs.
 
      (3) The company's "deductible finance costs outside the ring fence" means the total of the amounts that may be brought into account in respect of finance costs in calculating for the purposes of corporation tax the company's profits other than relevant shipping profits.
 
      (4) A company's "total finance costs" means so much of the company's finance costs as could, if there were no tonnage tax election, be brought into account in calculating the company's profits for the purposes of corporation tax.
 
      (5) What proportion of the company's total finance costs should be deductible outside the ring fence shall be determined on a just and reasonable basis by reference to the extent to which the funding in relation to which the costs are incurred is applied in such a way that any profits arising, directly or indirectly, would be relevant shipping profits.
 
      (6) Where an adjustment falls to be made under this paragraph, an amount equal to the excess referred to in sub-paragraph (2) shall be brought into account as if it were a non-trading credit falling for the purposes of Chapter II of Part IV of the Finance Act 1996 (loan relationships) to be brought into account in respect of a loan relationship of the company in respect of non-tonnage tax activities.
 
 
Treatment of finance costs: group company
     62. - (1) This paragraph applies to a tonnage tax company which is a member of a tonnage tax group where the activities carried on by the members of the group include activities other than tonnage tax activities.
 
      (2) An adjustment shall be made if it appears, in relation to an accounting period of the company, that the group's deductible finance costs outside the ring fence exceed a fair proportion of the total finance costs of the group.
 
      (3) A group's "deductible finance costs outside the ring fence" means so much of the group's finance costs as may be brought into account in calculating for the purposes of corporation tax-
 
 
    (a) in the case of a group member that is a tonnage tax company, the company's profits other than relevant shipping profits, and
 
    (b) in the case of a group member that is not a tonnage tax company, the company's profits.
      (4) A group's "total finance costs" means so much of the group's finance costs as could, if there were no tonnage tax election, be brought into account in calculating for the purposes of corporation tax the profits of any member of the group.
 
      (5) What proportion of the group's total finance costs should be deductible outside the ring fence shall be determined on a just and reasonable basis by reference to the extent to which the funding in relation to which the costs are incurred is applied in such a way that any profits arising, directly or indirectly, would be relevant shipping profits.
 
      (6) Where an adjustment falls to be made under this paragraph, an amount equal to the relevant proportion of the excess referred to in sub-paragraph (2) shall be brought into account as if it were a non-trading credit falling for the purposes of Chapter II of Part IV of the Finance Act 1996 (loan relationships) to be brought into account in respect of a loan relationship of the company in respect of non-tonnage tax activities.
 
  For this purpose "the relevant proportion" is the proportion that the company's tonnage tax profits bear to the tonnage tax profits of all the members of the group.
 
 
Meaning of "finance costs"
     63. - (1) For the purposes of paragraphs 61 and 62 "finance costs" means the costs of debt finance.
 
      (2) In calculating the costs of debt finance, the matters to be taken into account include-
 
 
    (a) any costs giving rise to a trading or non-trading debit under Chapter II of Part IV of the Finance Act 1996 (loan relationships);
 
    (b) any trading profit or loss, under Chapter II of Part IV of the Finance Act 1994 (interest rate and currency contracts), in relation to debt finance;
 
    (c) any exchange gain or loss within the meaning of Chapter II of Part II of the Finance Act 1993 in relation to debt finance;
 
    (d) the finance cost-
 
      (i) implicit in a payment under a finance lease, or
 
      (ii) payable on debt factoring or any similar transaction; and
 
    (e) any other costs arising from what would be considered on normal accounting principles to be a financing transaction.
      (3) No adjustment shall be made under paragraph 61 or 62 if, in calculating for a period the company's, or as the case may be, the group's deductible finance costs outside the ring fence, the amount taken into account in respect of costs and losses is exceeded by the amount taken into account in respect of profits and gains.
 
  PART VIII
  CHARGEABLE GAINS AND ALLOWABLE LOSSES ON TONNAGE TAX ASSETS
 
Chargeable gains: tonnage tax assets
     64. - (1) In this Part of this Schedule a "tonnage tax asset" means an asset that is used wholly and exclusively for the purposes of the tonnage tax activities of a tonnage tax company.
 
      (2) Where for one or more continuous periods of at least a year part of an asset has been used wholly and exclusively for the purposes of the tonnage tax activities of a tonnage tax company and part has not, this Part of this Schedule shall apply as if the part so used were a separate asset.
 
      (3) Where sub-paragraph (2) applies, any necessary apportionment of the gain or loss on the whole asset shall be made on a just and reasonable basis.
 
 
Chargeable gains: disposal of tonnage tax asset
     65. - (1) When an asset is disposed of that is or has been a tonnage tax asset-
 
 
    (a) any gain or loss on the disposal is a chargeable gain or allowable loss only to the extent (if any) to which it is referable to periods during which the asset was not a tonnage tax asset, and
 
    (b) any such chargeable gain or allowable loss on a disposal by a tonnage tax company is treated as arising otherwise than in the course of the company's tonnage tax trade.
      (2) For the purposes of sub-paragraph (1) the amount of the gain or loss on a disposal means what would be the amount of the chargeable gain or allowable loss apart from this paragraph.
 
      (3) The proportion of that gain or loss referable to periods during which the asset was not a tonnage tax asset is given by:

(P - PTTA) / P
 

       where:
 
 
    P is the total length of the period since the asset was created or, if later, the last third-party disposal, and
 
    PTTA is the length of the period (or the aggregate length of the periods) since-
 
      (a) the asset was created, or
 
      (b) if later, the last third-party disposal,
 
    during which the asset was a tonnage tax asset.
      (4) In sub-paragraph (3) a "third-party disposal" means a disposal (or deemed disposal) that is not treated as one on which neither a gain nor a loss accrues to the person making the disposal.
 
 
Chargeable gains: losses brought forward
     66. A tonnage tax election does not affect the deduction under section 8(1) of the Taxation of Chargeable Gains Act 1992 (corporation tax: computation of chargeable gains) of allowable losses that accrued to a company before it became a tonnage tax company.
 
 
Chargeable gains: roll-over relief for business assets
     67. - (1) Sections 152 and 153 of the Taxation of Chargeable Gains Act 1992 (roll-over relief for business assets) do not apply if or to the extent that the new assets are tonnage tax assets.
 
      (2) Where relief under either of those sections is, or has been, claimed in respect of the disposal of an asset ("Asset No.1") and the acquisition of another asset ("Asset No.2") that subsequently becomes a tonnage tax asset, the claimant is not (or, as the case may be, shall cease to be) entitled under that section to-
 
 
    (a) a reduction of the consideration for the disposal of Asset No.1, and
 
    (b) a corresponding reduction of the expenditure for the acquisition of Asset No.2,
       but so much of the chargeable gain arising on the disposal of Asset No.1 as is equal to the amount of the reduction that would have been made is treated as not accruing until Asset No.2 is disposed of.
 
      (3) Any chargeable gain accruing as a result of the rules in sub-paragraph (1) or (2) is treated as arising otherwise than in the course of the company's tonnage tax trade.
 
  PART IX
  THE RING FENCE: CAPITAL ALLOWANCES: GENERAL
 
Introduction
     68. - (1) This Part of this Schedule makes provision about capital allowances where a company enters, leaves or is subject to tonnage tax.
 
      (2) The general scheme of this Part of this Schedule is that-
 
 
    (a) entry of a company into tonnage tax does not of itself give rise to any balancing charges or balancing allowances,
 
    (b) a company subject to tonnage tax is not entitled to capital allowances in respect of expenditure incurred for the purposes of its tonnage tax trade, whether before or after its entry into tonnage tax, and
 
    (c) on leaving tonnage tax a company is put broadly in the position it would have been in if it had never been subject to tonnage tax.
      (3) A company's tonnage tax trade is not a qualifying activity for the purposes of determining the company's entitlement to capital allowances.
 
 
Entry: plant and machinery: assets to be used wholly for tonnage tax trade
     69. - (1) On a company's entry into tonnage tax any unrelieved qualifying expenditure attributable to plant or machinery that is to be used wholly for the purposes of the company's tonnage tax trade is taken to a single pool (the company's "tonnage tax pool").
 
      (2) For the purposes of this paragraph "unrelieved qualifying expenditure" means the balance that would otherwise have been carried forward under Part II of the Capital Allowances Act 1990.
 
      (3) The amount of unrelieved qualifying expenditure attributable to plant or machinery in a class pool, or the main pool, is the proportion of the whole given by:

AV / PV
 

       where:
 
 
    AV is the aggregate market value of the assets concerned immediately before entry into tonnage tax, and
 
    PV is the aggregate market value at that time of all the assets in the pool.
      (4) References in this paragraph to unrelieved qualifying expenditure include qualifying expenditure to the extent to which it is unrelieved by virtue of notice having been given under-
 
 
    (a) section 30(1) of the Capital Allowances Act 1990 (postponement or reduction of first year allowances), or
 
    (b) section 31(3) of that Act (postponement of writing-down allowance in respect of expenditure in single ship pool).
  No allowance may be claimed in respect of any such expenditure taken to the company's tonnage tax pool.
 
 
Entry: plant and machinery: assets to be used partly for tonnage tax trade
     70. - (1) This paragraph applies where, on a company's entry into tonnage tax, plant and machinery is to be used partly for the purposes of the company's tonnage tax trade and partly for the purposes of a qualifying activity carried on by the company.
 
      (2) The provisions of sections 24(6)(c)(iv) and 79(3) to (6) of the Capital Allowances Act 1990 (effect of use partly for trade and partly for other purposes) apply as follows-
 
 
    (a) references to a trade shall be read as references to the qualifying activity (and not as including a reference to the tonnage tax trade), and
 
    (b) references to purposes other than those of a trade shall be read as including references to the purposes of the tonnage tax trade.
 
Entry: ships acquired and disposed of within twelve months
     71. - (1) This paragraph applies if a company-
 
 
    (a) acquires a qualifying ship within the period of six months before the company enters tonnage tax, and
 
    (b) disposes of the ship before the end of the period of twelve months beginning with the day on which the ship was acquired.
      (2) The aggregate amount of the capital allowances to which the company is entitled for the period or periods before entry into tonnage tax in respect of its expenditure on acquiring the ship is limited to the amount by which that expenditure exceeds the market value of the ship on the company's entry into tonnage tax.
 
 
Entry: deferred balancing charge on disposal of ship
     72. - (1) This paragraph applies where deferment of a balancing charge has been claimed under sections 33A to 33F of the Capital Allowances Act 1990 (balancing charge on disposal of ship to be deferred and set against new expenditure incurred within six years) by a company that subsequently enters tonnage tax.
 
      (2) Expenditure on new shipping incurred by a company subject to tonnage tax shall not be taken into account for the purposes of those sections unless the company that incurred the balancing charge-
 
 
    (a) was a qualifying company for the purposes of this Schedule at the time the balancing charge arose, or
 
    (b) would have been such a company had this Schedule been in force at that time.
      (3) Subject to sub-paragraph (2)-
 
 
    (a) the company's entry into tonnage tax does not affect the operation of those sections, and
 
    (b) the expenditure on new shipping that is to be taken into account for the purposes of those sections shall be determined as if the company was not subject to tonnage tax.
 
During: plant and machinery: new expenditure partly for tonnage tax purposes
     73. - (1) This paragraph applies where a company subject to tonnage tax incurs expenditure on the provision of plant or machinery partly for the purposes of its tonnage tax trade and partly for the purposes of a qualifying activity.
 
      (2) The provisions of section 79(2) and (4) to (6) of the Capital Allowances Act 1990 (operation of single asset pool for mixed use assets) apply as follows-
 
 
    (a) references to a trade shall be read as references to the qualifying activity (and not as including a reference to the tonnage tax trade), and
 
    (b) references to purposes other than those of a trade shall be read as including references to the purposes of the tonnage tax trade.
 
During: plant and machinery: asset beginning to be used for tonnage tax trade
     74. A company's tonnage tax pool is not increased by reason of an asset beginning to be used for the purposes of the company's tonnage tax trade after the company's entry into tonnage tax.
 
 
During: plant and machinery: change of use of tonnage tax asset
     75. - (1) This paragraph applies where, at a time when a company is subject to tonnage tax, plant or machinery used for the purposes of the company's tonnage tax trade begins to be used wholly or partly for purposes other than those of that trade.
 
      (2) If the asset was acquired before entry into tonnage tax, section 24(6)(c)(iv) of the Capital Allowances Act 1990 applies (disposal value to be brought into account on plant of machinery beginning to be used wholly or partly for purposes other than those of the trade for which it was provided).
 
  The reference to the trade shall be read as a reference to the tonnage tax trade.
 
      (3) If the asset was acquired after entry into tonnage tax and begins to be used wholly or partly for the purposes of a qualifying activity carried on by the company, section 81(1)(a) of the Capital Allowances Act 1990 (effect of use after user not attracting capital allowances) applies as follows-
 
 
    (a) the reference to the trade shall be read as a reference to the qualifying activity (and as not including a reference to the tonnage tax trade), and
 
    (b) the reference to purposes such that the expenditure has not been taken into account in computing any capital allowance shall be read as including the purposes of the tonnage tax trade.
 
During: plant and machinery: change of use of non-tonnage tax asset
     76. - (1) This paragraph applies where, at a time when a company is subject to tonnage tax, plant or machinery used for the purposes of a qualifying activity carried on by the company begins to be used wholly or partly for the purposes of the company's tonnage tax trade.
 
      (2) The provisions of sections 24(6)(c)(iv) and 79(3) to (6) of the Capital Allowances Act 1990 (disposal value to be brought into account on plant or machinery beginning to be used wholly or partly for purposes other than those of trade for which it was provided) apply as follows-
 
 
    (a) references to a trade shall be read as references to the qualifying activity (and not as including a reference to the tonnage tax trade), and
 
    (b) references to purposes other than those of a trade shall be read as including references to the purposes of the tonnage tax trade.
 
During: plant and machinery: disposals
     77. - (1) This paragraph applies if when a company is subject to tonnage tax a disposal event occurs in relation to plant or machinery-
 
 
    (a) in respect of which qualifying expenditure was incurred by the company before its entry into tonnage tax,
 
    (b) some or all of the expenditure on which was carried to the tonnage tax pool on the company's entry into tonnage tax, and
 
    (c) which is used by the company for the purposes of its tonnage tax trade.
      (2) A "disposal event" means an event as a result of which the company is required under Part II of the Capital Allowances Act 1990 to bring a disposal value into account.
 
  In determining whether such an event has occurred references in that Part of that Act to a trade shall be read as including the company's tonnage tax trade.
 
      (3) Where this paragraph applies-
 
 
    (a) the disposal value to be brought into account in respect of any plant or machinery is limited to its market value when the company entered tonnage tax, and
 
    (b) the disposal value is set against the unrelieved qualifying expenditure in the company's tonnage tax pool.
      (4) If the amount of the disposal value is less than or equal to the amount of unrelieved qualifying expenditure in the company's tonnage tax pool, the amount of unrelieved qualifying expenditure is reduced or extinguished accordingly.
 
      (5) If-
 
 
    (a) the amount of the disposal value exceeds the amount of unrelieved qualifying expenditure, or
 
    (b) there is no unrelieved qualifying expenditure in the pool,
       the company is liable to a balancing charge.
 
      (6) The amount of the balancing charge is-
 
 
    (a) where sub-paragraph (5)(a) applies, the amount of the excess, or
 
    (b) where sub-paragraph (5)(b) applies, the amount of the disposal value.
  This is subject to any reduction under paragraph 78.
 
 
During: plant and machinery: reduction of balancing charges
     78. - (1) The amount of any balancing charge under this Part of this Schedule is reduced by reference to the number of whole years the company has been subject to tonnage tax at the time of the disposal event giving rise to the charge.
 
      (2) The following table shows the percentage reduction:
 
 
 
Number of years
 
Percentage reduction
 
1
 
15%
 
2
 
30%
 
3
 
45%
 
4
 
60%
 
5
 
75%
 
6
 
90%
 
7 or more
 
100%
 
During: plant and machinery: giving effect to balancing charge
     79. - (1) A balancing charge under this Part of this Schedule-
 
 
    (a) is treated as arising in connection with a trade (other than its tonnage tax trade) carried on by the company, and
 
    (b) is made in taxing that trade.
      (2) Subject to paragraph 80 (deferment of balancing charge in case of reinvestment), the charge must be given effect in the accounting period in which it arises.
 
 
During: plant and machinery: deferment of balancing charge
     80. - (1) If-
 
 
    (a) a balancing charge under this Part of this Schedule arises in connection with the disposal of a qualifying ship, and
 
    (b) within the requisite period the company incurs capital expenditure on acquiring one or more other qualifying ships, and
 
    (c) the company claims relief under this paragraph,
       only the amount (if any) by which the balancing charge exceeds that expenditure must be given effect in the accounting period in which the charge arises and the rest may be held over.
 
      (2) For the purposes of this paragraph-
 
 
    (a) the disposal of a qualifying ship includes any event within section 24(6)(c)(i) to (iii) of the Capital Allowances Act 1990 occurring with respect to a qualifying ship, and
 
    (b) the requisite period is the period beginning one year before, and ending two years after, the date of the disposal.
      (3) If the new qualifying ship (or any of them) is disposed of before the end of the period of seven years after the company in question entered tonnage tax-
 
 
    (a) there is a balancing charge under this paragraph when the disposal occurs, and
 
    (b) the amount of that charge is equal to the amount held over under sub-paragraph (1) by reference to the acquisition of that ship.
  This is subject to any reduction under paragraph 78 and to any further deferment under this paragraph.
 
      (4) Sections 33A to 33F of the Capital Allowances Act 1990 (deferment of balancing charges) do not apply in relation to balancing charges arising when the company is subject to tonnage tax.
 
      (5) The fact that there is a balancing charge under this paragraph does not affect the operation of paragraph 77 in a case where that paragraph also applies.
 
 
During: plant and machinery: surrender of unrelieved qualifying expenditure
     81. - (1) This paragraph applies where-
 
 
    (a) a company subject to tonnage tax is liable to a balancing charge under this Part of this Schedule,
 
    (b) another tonnage tax company which is a member of the same group has unrelieved qualifying expenditure in its tonnage tax pool, and
 
    (c) the two companies have been members of the same group for not less than a year at the date of the disposal giving rise to the balancing charge.
      (2) The latter company may surrender to the former all or part of its unrelieved qualifying expenditure, and the amount of the balancing charge shall be reduced or extinguished accordingly.
 
      (3) The provisions of Part VIII of Schedule 18 to the Finance Act 1998 (corporation tax self-assessment: claims for group relief), except paragraph 77 (joint amended returns), apply in relation to relief under this paragraph as they apply in relation to group relief.
 
 
During: industrial buildings: mixed use
     82. Where any identifiable part of a building or structure is used for the purposes of a company's tonnage tax trade, that part is treated for the purposes of Part I of the Capital Allowances Act 1990 as used otherwise than as an industrial building or structure.
 
 
During: industrial buildings: balancing charges
     83. - (1) This paragraph applies where, in an accounting period during which a company is subject to tonnage tax, a disposal event occurs in relation to an industrial building or structure in respect of which qualifying expenditure was incurred by the company before its entry into tonnage tax.
 
      (2) A "disposal event" means an event by reason of which the company is required by Part I of the Capital Allowances Act 1990 to bring into account sale, insurance, salvage or compensation moneys.
 
  In determining whether such an event has occurred references in that Part of that Act to a trade or undertaking shall be read as including the company's tonnage tax trade.
 
      (3) Where this paragraph applies-
 
 
    (a) the sale, insurance, salvage or compensation moneys to be brought into account in respect of any industrial building or structure are limited to the market value of the relevant interest when the company entered tonnage tax; and
 
    (b) the amount of any balancing charge under that Part is reduced in accordance with paragraph 78.
 
During: industrial buildings: residue of qualifying expenditure
     84. - (1) This paragraph applies where a company subject to tonnage tax disposes of the relevant interest in an industrial building or structure.
 
      (2) The provisions of section 8(1) to (12) of the Capital Allowances Act 1990 (writing off of expenditure and meaning of "residue of expenditure") apply to determine the residue of expenditure in the hands of the person who acquires the relevant interest, as if-
 
 
    (a) the company had not been subject to tonnage tax, and
 
    (b) all writing-down allowances, and balancing allowances and charges, had been made as could have been made if the company had not been subject to tonnage tax.
 
Exit: plant and machinery
     85. - (1) If a company leaves tonnage tax-
 
 
    (a) the amount of qualifying expenditure under Part II of the Capital Allowances Act 1990 (plant and machinery), and
 
    (b) the pools to which such expenditure is to be allocated for the purposes of that Part,
       shall be determined under this paragraph.
 
      (2) For each asset used by the company for the purposes of its tonnage tax activities and held by the company when it leaves tonnage tax there shall be determined-
 
 
    (a) the amount of expenditure incurred on the provision of the asset that would have been qualifying expenditure if the company had not been subject to tonnage tax, and
 
    (b) the written down value of that amount by reference to the period since the expenditure was incurred.
      (3) The Inland Revenue shall make provision by regulations as to the basis on which the writing down is to be done.
 
  The regulations may make different provision for different descriptions of asset.
 
 
Exit: industrial buildings
     86. If a company leaves tonnage tax the amount of unrelieved qualifying expenditure under Part I of the Capital Allowances Act 1990 (industrial buildings) is calculated as if-
 
 
    (a) the company had never been subject to tonnage tax, and
 
    (b) all such allowances and charges under that Part had been made as could have been made.
 
Meaning of "not entitled to capital allowances"
     87. - (1) Where any provision of this Part of this Schedule states that a person is not entitled to capital allowances in respect of expenditure on plant or machinery-
 
 
    (a) a first-year allowance shall not be given in respect of that expenditure, and
 
    (b) the expenditure shall be disregarded for the purposes of sections 24, 25 and 26 of the Capital Allowances Act 1990.
      (2) If there is no entitlement to capital allowances in respect of expenditure, there is no entitlement to capital allowances in respect of any additional VAT liability incurred in respect of it.
 
 
Interpretation
     88. - (1) In this Part of this Schedule-
 
 
    "capital allowance" means any allowance under the Capital Allowances Act 1990 or any provision of the Taxes Act 1988 that is to be construed as one with that Act;
 
    "qualifying activity" means-
 
      (a) a trade, or
 
      (b) an activity treated as a trade or to which capital allowance provisions apply as they apply to a trade,
 
    in respect of which a person may be entitled to a capital allowance;
 
    "qualifying expenditure" means expenditure in respect of which a person is or may be entitled to a capital allowance.
      (2) In this Part of this Schedule references to pooling are to the way in which effect is given to provisions requiring expenditure to be aggregated for the purpose of determining a person's entitlement to, or the amount of, a capital allowance.
 
      (3) In the context of capital allowances for plant and machinery-
 
 
    (a) "single asset pool" refers to the way in which effect is given to provisions under which an asset is be treated as having been provided for the purposes of a notional trade separate from all other trades,
 
    (b) "class pool" refers to the way in which effect is given to provisions under which assets of a particular description are so treated, and
 
    (c) "main pool" refers to the way in which effect is given to provisions relating to assets not allocated to a single asset pool or class pool.
      (4) Other expressions relating to capital allowances have the same meaning in this Part of this Schedule as in the Capital Allowances Act 1990.
 
  PART X
  THE RING FENCE: CAPITAL ALLOWANCES: SHIP LEASING
 
Introduction
     89. - (1) In the case of a finance lease of a qualifying ship provided, directly or indirectly, to a company within tonnage tax, the provisions of Part II of the Capital Allowances Act 1990 have effect subject to and in accordance with the provisions of-
 
 
    paragraphs 90 and 91 (defeased leasing),
 
    paragraph 92 (sale and lease back arrangements, and
 
    paragraphs 94 to 102 (quantitative restrictions on allowances).
      (2) In this Part of this Schedule "finance lease", and "lessor" and "lessee" in relation to a finance lease, have the same meaning as in that Part (see section 82A of the 1990 Act).
 
      (3) Other expressions used in this Part of this Schedule have the same meaning as in Part IX of this Schedule (the ring fence: capital allowances: general).
 
 
Defeased leasing
     90. - (1) The lessor under the finance lease is not entitled to capital allowances in respect of expenditure on the provision of the ship if-
 
 
    (a) the lease, or
 
    (b) any transaction or series of transaction of which the lease forms a part,
       makes provision the effect of which is to remove the whole, or the greater part of, any non-compliance risk which, apart from that provision, would fall directly or indirectly on the lessor.
 
      (2) For this purpose a "non-compliance risk" means a risk that a loss will be sustained by any person if payments under the lease are not made in accordance with its terms.
 
      (3) For the purposes of this paragraph the lessor and any persons connected with him shall be treated as the same person.
 
      (4) In this paragraph "connected person" has the meaning given by section 839 of the Taxes Act 1988.
 
 
Defeased leasing: excepted forms of security
     91. - (1) Paragraph 90 (defeased leasing) is subject to the following exceptions.
 
      (2) It does not apply to the provision of security of any of the following kinds by the lessee, or a person connected with the lessee-
 
 
    (a) a mortgage of the ship;
 
    (b) security attaching-
 
      (i) to the ship's earnings, or
 
      (ii) to the proceeds of insurance policies on the ship;
 
    (c) security over rental rebates arising from the arm's length sale of the ship;
 
    (d) any other form of security relating to assets, sums or rights arising directly from the ordinary operation of the ship or from arm's length transactions involving the ship.
  In this sub-paragraph "the ship" means the ship that is the subject of the lease.
 
      (3) It does not apply to the provision of security by the lessee, or a person connected with the lessee, if the following conditions are met-
 
 
    (a) no deposit of money or other property by way of security is obtained by the lessor or any third party;
 
    (b) any payments under the security are limited to the amount of any rental payments under the lease in respect of which the lessee is in default.
      (4) It does not apply to the provision of security by a third party where no security other than security of a kind mentioned in sub-paragraph (2)(a) to (d) is held by the third party or any person connected with the third party.
 
      (5) It does not apply to the provision of security by a third party if the following conditions are met-
 
 
    (a) no deposit of money or other property by way of security is obtained by the lessor or any third party;
 
    (b) the security does not involve the assumption of any obligations of the lessee under the lease in return for a payment made (directly or indirectly) by the lessee or a person connected with him;
 
    (c) the security does not give rise to any payments to the lessor unless the lessee defaults on the rental payments under the lease;
 
    (d) any payments under the security are limited to the amount of the rental payments in default.
      (6) For the purposes of this paragraph the lessor and any persons connected with him shall be treated as the same person.
 
      (7) In this paragraph-
 
 
    "connected person" has the meaning given by section 839 of the Taxes Act 1988; and
 
    "third party" means a person not connected with either the lessor or the lessee.
 
Sale and lease-back arrangements
     92. - (1) The lessor under the finance lease is not entitled to capital allowances if the lease is part of sale and lease-back arrangements.
 
      (2) For this purpose "sale and lease-back arrangements" means, subject to sub-paragraph (3), any arrangements that take the following form:
 
Step One      The ship is owned by a tonnage tax company and used for the purposes of its tonnage tax trade.
 
Step Two      A transaction is entered into, as a result of which (apart from this paragraph) capital allowances would become available to the lessor, under which-
 
 
    (a) the ship (or an interest in it) is sold, or
 
    (b) a person enters into a contract on the performance of which he will or may become the owner of the ship (or an interest in it), or
 
    (c) a person entitled to the benefit of any such contract assigns the benefit of it so far as it relates to the ship (or an interest in it).
Step Three      After the time of that transaction the ship is used for the purposes of a tonnage tax trade carried on-
 
 
    (a) by the original company, or
 
    (b) by another tonnage tax company that is a member of the same group,
       without having been used since that time for the purposes of any other trade (except that of leasing).
 
      (3) This paragraph does not apply if the ship is newly-constructed and the transaction mentioned in Step Two in sub-paragraph (2) is effected not more than four months after the first occasion on which the ship is brought into use by any person for any purpose.
 
      (4) A person is regarded for the purposes of this paragraph as owning a ship if it is treated as belonging to him for the purposes of Part II of the Capital Allowances Act 1990.
 
 
Certificates required to support claim by finance lessor
     93. - (1) Any claim by the lessor under a finance lease for capital allowances in respect of expenditure on the provision of a qualifying ship must be accompanied by a certificate by the lessor and the lessee stating either-
 
 
    (a) that the ship is not leased, directly or indirectly, to a company subject to tonnage tax, or
 
    (b) that neither paragraph 90 (defeased leasing) nor paragraph 92 (sale and lease-back arrangements) applies in relation to the lease.
      (2) If any matter so certified ceases to be the case, the lessor must give notice of that fact to the Inland Revenue.
 
      (3) Any such notice must be given within three months after the end of the chargeable period in which the change takes place.
 
      (4) In the second column of the Table in section 98 of the Taxes Management Act 1970 (penalty for failure to provide information etc.), after the final entry insert-
 
 
 
"
 
Paragraph 93(2) of Schedule 22 to the Finance Act 2000."
 
Quantitative restrictions on allowances
     94. - (1) Where the lessor under the finance lease is entitled to capital allowances in respect of expenditure on the provision of the ship, the following provisions apply.
 
      (2) There is no entitlement to any first-year allowance.
 
      (3) The lessor is entitled-
 
 
    (a) in respect of the first £40 million of the cost of providing the ship, to writing-down allowances at a rate of 25% per annum on the reducing balance, and
 
    (b) in respect of the next £40 million, to writing-down allowances at a rate of 10% per annum on the reducing balance.
      (4) The expenditure within each of those bands shall be allocated to separate pools and dealt with under Part II of the Capital Allowances Act 1990 in the same way as expenditure allocated to a class pool.
 
  These pools are referred to below as "the 25% pool" and "the 10% pool".
 
      (5) If the cost of providing the ship exceeds £80 million, the lessor is not entitled to capital allowances in respect of the excess.
 
 
Quantitative restrictions: further provisions as to rate bands, limit and pooling
     95. - (1) The rate bands and limit in paragraph 94 (quantitative restrictions on allowances) apply separately in relation to each ship.
 
      (2) The amounts specified in that paragraph apply in relation to the whole cost of providing the ship.
 
      (3) If-
 
 
    (a) the cost is shared by two or more persons, or
 
    (b) a person acquires a part share in the ship,
       that paragraph applies as if there were substituted in sub-paragraph (3)(a) and (b) and sub-paragraph (5) in relation to each person the proportion of the figure specified that his share of the cost bears to the whole cost.
 
      (4) The pools referred to in sub-paragraph (4) of that paragraph are class pools of all expenditure of a lessor that falls to be allocated to a 25% or 10% pool in respect of ships leased by him.
 
 
Quantitative restrictions: meaning of "cost of providing ship"
     96. - (1) For the purposes of paragraph 94 (quantitative restrictions on allowances) the cost of providing the ship means the total cost of providing it in a state ready to be brought into use for the purposes for which it is normally to be used.
 
  This includes the cost of any accessories or additional equipment, or fitting out, necessary for the operation of the ship for those purposes.
 
      (2) The cost of providing the ship shall be determined without regard to the provisions of the Capital Allowances Act 1990 as to-
 
 
    (a) when expenditure is treated as incurred, or
 
    (b) when expenditure may be brought into account as qualifying expenditure.
      (3) Further capital expenditure by the lessor on the ship shall be added to the original cost of providing the ship to determine-
 
 
    (a) whether the lessor is entitled to capital allowances in respect of the further expenditure, and
 
    (b) if he is, the rate of writing-down allowances to which he is entitled.
  References to the cost of providing the ship shall accordingly be read as including any such further expenditure.
 
      (4) The amounts to be taken into account under this paragraph are limited to the amounts that would otherwise have been qualifying expenditure for the purposes of capital allowances.
 
 
Quantitative restrictions: treatment of disposal proceeds
     97. - (1) The following provisions apply where-
 
 
    (a) there is a disposal of a ship in relation to which paragraph 94 applies to restrict the capital allowances available, and
 
    (b) a disposal value falls fall to be brought into account.
  The reference in paragraph (a) to a disposal of ship includes a disposal of a part of a ship, or of an interest in a ship or a part of a ship.
 
      (2) The disposal value is first allocated between the 25% pool and the 10% pool in the same proportions as the cost of providing the ship was allocated to those pools.
 
      (3) If the amount allocated to the 25% pool exceeds the amount of qualifying expenditure remaining in that pool, any excess shall be taken to the 10% pool.
 
      (4) A balancing charge arises only if the amount taken to the 10% pool exceeds the amount of qualifying expenditure remaining in that pool.
 
 
Quantitative restrictions: change of circumstances bringing case within restrictions
     98. - (1) The provisions of this paragraph apply where-
 
 
    (a) the lessor under a finance lease has been entitled to capital allowances in circumstances in which paragraph 94 (quantitative restrictions on allowances) did not apply, and
 
    (b) a change of circumstances brings the case within paragraph 89(1) so that the restrictions in paragraph 94 do apply.
      (2) In this paragraph-
 
 
    "the relevant period" means the period beginning-
 
      (a) with the beginning of the accounting period of the lessor in which there occurs the change of circumstances in relation to which this paragraph applies, or
 
      (b) if since the beginning of that period there has been a change of circumstances in relation to which paragraph 99 applied (change taking case out of restrictions), with the time of that change (or if there has been more than one such change, the last of them),
 
    and ending with the time of the change of circumstances in relation to which this paragraph applies; and
 
    "the lessor's normal pool" means the lessor's pool that contains the qualifying expenditure relating to the ship at the beginning of the relevant period.
      (3) At the beginning of the relevant period an amount ("amount A") equal to-
 
 
    (a) the tax written down value of the ship as at that time, or
 
    (b) if less, the amount of unrelieved qualifying expenditure in the lessor's normal pool at that time,
       shall be brought into account as a disposal value in the lessor's normal pool.
 
      (4) At the same time an amount of qualifying expenditure equal to amount A shall be taken to a separate single-asset pool ("the temporary pool").
 
      (5) Any qualifying expenditure or other items relating to the ship that would otherwise have been brought into account in the lessor's normal pool in the relevant period shall instead be brought into account in the temporary pool.
 
      (6) At the end of the relevant period, the temporary pool shall be closed as if the ship had been disposed of by the lessor for an amount equal to its tax written down value at that time ("amount B"), and any resulting balancing allowance or balancing charge shall be given effect.
 
      (7) The lessor shall be treated as if he had incurred qualifying expenditure equal to amount B on the provision of the ship for the purposes of the lessee's tonnage tax trade immediately after the end of the relevant period.
 
      (8) There shall be allocated to the lessor's 25% and 10% pools the same proportions of amount B as the proportions of the actual cost of providing the ship that would have been so allocated if the case had been within paragraph 89(1) at all material times.
 
 
Quantitative restrictions: change of circumstances taking case out of restrictions
     99. - (1) The provisions of this paragraph apply where-
 
 
    (a) the lessor under a finance lease has been entitled to capital allowances in circumstances in which paragraph 94 (quantitative restrictions on allowances) applied, and
 
    (b) a change of circumstances takes the case out of paragraph 89(1) so that the restrictions in paragraph 94 no longer apply.
      (2) When the change of circumstances occurs a disposal value shall be brought into account by the lessor equal to the tax written down value of the ship as at that time.
 
  The provisions of paragraph 97 (treatment of disposal proceeds) apply as regards the allocation of that amount to the lessor's 25% and 10% pools.
 
      (3) The lessor shall be treated as if he had incurred qualifying expenditure on the provision of the ship for the purposes of the lessee's non-tonnage tax trade immediately after the change of circumstances occurs.
 
      (4) The amount of that expenditure shall be taken to be the whole of the expenditure on the ship that would have qualified for capital allowances if paragraph 94 had never applied, written down at 25% per annum on the reducing balance for the period beginning with the time when it was actually incurred and ending when the change of circumstances occurs.
 
 
Determination of tax written down value, etc.
     100. - (1) This paragraph supplements paragraphs 98 and 99.
 
      (2) The "tax written down value" of the ship at any time means what would be the amount of unrelieved qualifying expenditure at that time determined on the following assumptions-
 
 
    (a) that the qualifying expenditure relating to the ship had been held in a single asset pool, and
 
    (b) that there had been made to the lessor-
 
      (i) the first-year allowance (if any) that was actually made to him,
 
      (ii) any first-year allowance falling to be made to him that was postponed under section 30(1)(a) or (c) of the Capital Allowances Act 1990, and
 
      (iii) the maximum amount of any writing-down allowances that, on the preceding assumptions, could have been made.
      (3) The references in paragraph 98(3)(b) and sub-paragraph (2) above to the amount of "unrelieved qualifying expenditure" are to the balance that would otherwise have been carried forward under Part II of the Capital Allowances Act 1990.
 
      (4) For the purpose of determining that amount at a time other than the beginning or end of an accounting period of the lessor, it shall be assumed that an accounting period of the lessor began or ended at that time.
 
 
Quantitative restrictions: power to alter amounts by regulations
     101. - (1) The Inland Revenue may by regulations alter the amounts for the time being specified in sub-paragraph (3)(a) and (b) and sub-paragraph (5) of paragraph 94 (quantitative restrictions on allowances).
 
      (2) The regulations may contain such incidental, supplementary and transitional provisions as appear to the Inland Revenue to be appropriate.
 
 
Exclusion of leases entered into on or before 23rd December 1999
     102. The provisions of this Part do not apply in relation to a finance lease entered into on or before 23rd December 1999.
 
 
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