Finance Act 2006

Balancing charges for certain buildings and structures.

39.— (1) Part 9 of the Principal Act is amended—

(a) in section 274—

(i) in subsection (1)(b), by substituting “Notwithstanding paragraph (a) and subsection (2A)(b)” for “Notwithstanding paragraph (a)”, and

(ii) by inserting the following after subsection (2)—

“(2A) (a) In this subsection ‘relevant facility’ means a building or structure which—

(i) is in use for the purposes of a trade referred to in paragraph (g) of section 268(1),

(ii) is in use as a qualifying residential unit (within the meaning of section 268(3A)) which, by virtue of section 268(3B), is deemed to be a building or structure referred to in subparagraph (i),

(iii) is in use for the purposes of a trade referred to in paragraph (i) of section 268(1),

(iv) is in use for the purposes of a trade referred to in paragraph (j) of section 268(1),

(v) is in use for the purposes of a trade referred to in paragraph (l) (as inserted by the Finance Act 2006) of section 268(1), or

(vi) is a qualifying premises (within the meaning of section 843A(1)) which is in use for the purposes of providing the service or services referred to in paragraph (b) of the definition of ‘qualifying premises’ in that section.

(b) Where—

(i) a building or structure is a relevant facility to which subparagraph (i), (ii), (iii), (iv), (v) or (vi) of paragraph (a) applies,

(ii) an allowance has been made under this Chapter in respect of capital expenditure incurred on the construction or refurbishment of the building or structure, and

(iii) the building or structure concerned ceases to be a relevant facility,

then, subject to paragraph (c), such cessation shall be treated as an event which gives rise to a balancing charge under this section and that balancing charge shall be made on the person entitled to the relevant interest in the building or structure concerned immediately before that event occurs, for the chargeable period related to that event.

(c) Paragraph (b) shall not apply if, within 6 months of the cessation referred to in subparagraph (iii) of that paragraph, the building or structure concerned is again a relevant facility by virtue of the application of any subparagraph of paragraph (a), other than the subparagraph by virtue of which the building or structure was previously treated as a relevant facility.”,

and

(b) in section 318—

(i) in paragraph (c) by deleting “and” at the end of that paragraph,

(ii) in paragraph (d) by substituting “sums, and” for “sums.”, and

(iii) by inserting the following after paragraph (d):

“(e) where the event is a cessation referred to in section 274(2A)(b), the aggregate of—

(i) the residue of expenditure (within the meaning of section 277) incurred on the construction or refurbishment of the building or structure immediately before that event, and

(ii) the allowances made under Chapter 1 of this Part in respect of the capital expenditure incurred on the construction or refurbishment of the building or structure.”.

(2) This section shall apply in relation to a building or structure which—

(a) is first used on or after 1 January 2006, or

(b) where capital expenditure on the refurbishment of the building or structure is incurred, is, subsequent to the incurring of that expenditure, first used on or after 1 January 2006.