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Amendment of section 64 of Principal Act (capital goods scheme)
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55. Section 64 of the Principal Act is amended by inserting the following after subsection (8):
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“(8A) (a) Paragraph (b) applies where—
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(i) either—
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(I) a capital goods owner supplies a capital good which has not been completed and tax is chargeable on that supply, or
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(II) a capital goods owner transfers (other than a transfer to which subsection (10)(c) applies) a capital good which has not been completed and tax would have been chargeable on that transfer but for the application of section 20(2)(c),
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(ii) at the time of that supply or transfer, that owner and the person to whom the capital good is supplied or transferred are connected within the meaning of section 97, and
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(iii) the amount of tax—
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(I) chargeable on the supply of that capital good,
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(II) that would have been chargeable on the transfer of that capital good but for the application of section 20(2)(c), or
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(III) that would have been chargeable on the supply but for the application of section 56,
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is less than the total tax incurred in relation to that capital good by the capital goods owner making that supply or transfer.
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(b) The capital goods owner shall calculate an amount, which shall be payable by that owner as if it were tax due in accordance with Chapter 3 of Part 9 for the taxable period in which the supply or transfer occurs, in accordance with the formula—
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K — L
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where—
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K is the total tax incurred in relation to that capital good by the capital goods owner making that supply or transfer, and
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L is the amount of tax chargeable on the supply of that capital good, or the amount of tax that would have been chargeable on the transfer of that capital good but for the application of section 20(2)(c), or the amount of tax that would have been chargeable on the supply but for the application of section 56.”.
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