Finance Act, 1997

Relief for pre-trading expenditure.

29.—(1) Subject to subsection (4), where a person incurs expenditure for the purposes of a trade or profession before the time that the trade or profession has been set up and commenced by that person, and such expenditure—

(a) is incurred not more than three years before that time, and

(b) is not allowable, apart from this section, as a deduction for the purpose of computing the profits or gains of the trade or profession for the purposes of Case I or Case II of Schedule D, but would have been so allowable if it had been incurred after that time,

then the expenditure shall be treated for that purpose as having been incurred at that time.

(2) Where—

(a) a company pays any charges on income (within the meaning of section 10 of the Corporation Tax Act, 1976 ) before the time it sets up and commences a trade, and

(b) the payment is made wholly and exclusively for the purposes of that trade,

that payment, to the extent that it is not otherwise deducted from total profits of the company, shall be treated for the purposes of corporation tax as paid at that time.

(3) Where an individual who has set up and commenced a trade or profession has been assessed to tax for any year of assessment under section 434 of the Income Tax Act, 1967 , in respect of a payment—

(a) made before the time the trade or profession has been set up and commenced, and

(b) wholly and exclusively for the purposes of the trade or profession,

then section 316 of the Income Tax Act, 1967 , shall apply in relation to the payment as it would apply if the payment were made at that time.

(4) The amount of any expenditure which is to be treated under subsection (1) as incurred at the time that a trade or profession has been set up and commenced shall not be so treated for the purposes of section 307 of the Income Tax Act, 1967 , or section 16 (2), 16A (3), 116 or 116A of the Corporation Tax Act, 1976 .

(5) An allowance or deduction shall not be made under any provision of the Tax Acts, other than this section, in respect of any expenditure or payment which is treated under this section as incurred on the day on which a trade or profession is set up and commenced.

(6) This section shall apply to expenditure incurred for the purposes of a trade or profession which is set up and commenced on or after the 22nd day of January, 1997.