280 Temporary disuse of building or structure

Summary

This section deals with the position which arises when a building or structure which has been in use for the purposes of an industrial trade becomes temporarily disused, and provides that during such a period of temporary disuse the building will continue to be treated as an industrial building or structure. Thus, writing-down allowances continue to be available and a balancing allowance or charge may also arise during this period. The section is necessary because writing-down allowances can be made only if a building or structure is an industrial building or structure at the material time. Where a building or structure which has always been used for industrial purposes is temporarily disused, it would not be right to deny the owner writing-down allowances. Similarly, if it is sold during a period of temporary disuse, it would not be right to deny a balancing allowance or, indeed, prohibit a balancing charge.

Details

Continued treatment as industrial building or structure during period of temporary disuse

(1) A building or structure is not treated as ceasing altogether to be used by reason that it is temporarily out of use and, if immediately before the period of temporary disuse it had been an industrial building or structure, it continues to be treated as such during the period of temporary disuse.

Manner of making allowances and charges during period of temporary disuse

(2)(a) In the case of a trader, where the period of temporary disuse occurs while the trade is still being carried on, any writing-down allowances and any balancing allowance or charge arising continue to be made in taxing the trade. Where, however, the trade has been permanently discontinued, any writing-down allowance or balancing allowance to be made during any period of temporary disuse after the discontinuance of the trade is made by means of discharge or repayment of tax, and any balancing charge to be made during that period is made under Case IV of Schedule D.

In the case of a lessor, if the lease of the building or structure has come to an end, any writing-down allowance or balancing allowance to be made during any period of temporary disuse after the coming to an end of the lease is made by means of discharge or repayment of tax, and any balancing charge to be made during that period is made under Case IV of Schedule D.

(2)(b) However, if for the chargeable period the lessor has income chargeable to tax under Case V of Schedule D, any writing-down allowance, balancing allowance or balancing charge to be made in respect of the industrial building or structure is to be made in charging the lessor’s income under Case V of Schedule D.

Construction of “permanent discontinuance of a trade”

(3) The permanent discontinuance of a trade does not include the happening of any event (for example, a change of proprietorship – see section 69) which is treated under the Income Tax Acts as equivalent to the discontinuance of a trade.

Relevant Date: Finance Act 2021