302 Interpretation (Chapter 3)

Summary

This section provides for the interpretation of certain terms used in the Chapter.

Details

Definitions

(1) “dredging” includes the removal of anything forming part of, or projecting from, the bed of the sea or of any inland water in order to facilitate navigation. It also includes the widening of an inland waterway in order to facilitate navigation.

“qualifying trade” is a trade or undertaking which, or part of which, consists of the maintenance or improvement of the navigation of a harbour, estuary or waterway, or is carried on in an industrial building or structure as defined in section 268(1). Where part only of a trade satisfies these conditions, that part is to be treated as a separate trade and expenditure on dredging must be apportioned between the part treated as a qualifying trade and the other part.

Thus, a harbour authority which may not itself occupy a dock may qualify for the allowances on the grounds that it is carrying on a “qualifying trade” which or part of which consists of the maintenance or improvement of the navigation of a harbour. In other words, take the case of a harbour authority which deepens or widens the channel leading to a private dock occupied by a trader. The harbour authority’s interest is, of course, that it receives dues from ships using the facilities provided. Although the harbour authority does itself not occupy the dock, it may still obtain allowances under this section in respect of the capital expenditure it incurs in deepening or widening the channel. Any other trader must, however, satisfy the condition that the dock or other premises is occupied by that trader for the purpose of a qualifying trade and that the dredging expenditure was incurred for the benefit of that dock or premises.

The first relevant chargeable period

(2) The “first relevant chargeable period” is the chargeable period for which the initial allowance and the first of the annual writing-down allowances are to be given under section 303(1). In the case of income tax, this is normally the year of assessment in the basis period (see section 306) for which the expenditure is incurred while, in the case of corporation tax, it is normally the accounting period in which the expenditure is incurred. Where, however, the case is one to which section 303(6) applies (that is, where the expenditure is incurred before trading begins or before the dock or other premises is occupied), the “first relevant chargeable period” is, in the case of income tax, the first year of assessment in the basis period for which the person is carrying on the trade and is also occupying the dock or other premises and, in the case of corporation tax, the first accounting period in which the company is carrying on the trade and is also occupying the dock or other premises.

Relevant Date: Finance Act 2021