Revenue Note for Guidance
Capital allowances are available in respect of capital expenditure incurred in the period 1 July 1995 to 30 June 1998 on the construction or refurbishment of certain multi-storey car parks in urban areas which are certified by the relevant local authority as having been developed in accordance with criteria laid down by the Minister for the Environment and Local Government following consultation with the Minister for Finance. The end date for the scheme has been extended to 30 September 1999 (all areas) or to 31 July 2008 (car-parks outside of Cork and Dublin) where certain conditions are met. The allowances available were originally restricted to a maximum 50 per cent write-off of the capital expenditure incurred but this restriction applies as respects expenditure incurred after 31 July 1998 only if double rent allowance is availed of in relation to the multi-storey car park.
Where a project qualifies for the extension to 31 July 2008, the amount of any capital expenditure attributable to the year 2007 and to the period 1 January 2008 to 31 July 2008 which may qualify for capital allowances must be reduced to 75 per cent and 50 per cent respectively of the amount for the capital expenditure attributable to period involved.
The allowances available in relation to capital expenditure incurred (or that expenditure as reduced in accordance with the above restrictions) are—
(1) “multi-storey car park” is a building or structure of 2 or more storeys wholly in use for the purpose of providing parking for the public generally “without preference for any particular class of person” and “on payment of an appropriate charge”. These requirements are intended to exclude the allocation of parking space other than on a “first come, first served” basis. It will, for example, prevent a firm providing parking facilities allegedly for the public generally but which are, in reality, reserved full-time for its staff either without charge or on payment of a nominal charge. The building or structure which constitutes the car park must be “wholly” in use for the purposes outlined above i.e. it may not be in use for other commercial purposes.
“qualifying multi-storey car park” is a multi-storey car park in respect of which the relevant local authority gives the appropriate certificate in writing to the person providing the multi-storey car park. Such a certificate will state that the local authority is satisfied that the car park has been developed in accordance with criteria laid down by the Minister for the Environment and Local Government following consultation with the Minister for Finance.
“qualifying period” is the period from 1 July, 1995 to 30 June, 1998, within which capital expenditure must be incurred on the construction or refurbishment of qualifying multi-storey car parks in order to qualify for the capital allowances available. This period has been extended to 30 September 1999 where the “relevant local authority” certified, by 30 September 1998, that at least 15 per cent of the total cost of the project had been incurred before 1 July 1998. The qualifying period has been further extended, but only for multi-storey car parks outside the jurisdictions of the Cork and Dublin City Councils:
“the relevant local authority” is essentially the local authority in whose functional area the multi-storey car park is situated. It includes the corporation of a county or other borough, urban district councils and county councils. In regard to the definition of “local authority”, it should be noted that, by virtue of section 3(2) of, and Schedule 2 to, the Local Government Act 2001, references in any other enactment to “county borough corporation”, “borough corporation” (not being a county borough corporation), “council of a county” and “council of an urban district”, and to similar or analogous expressions, are now to be construed as references to “City council”, “Borough council of a borough mentioned in Chapter 1 of Part 1 of Schedule 6 to the Local Government Act 2001”, “County council” and “Town council of a town mentioned in Chapter 2 of Part 1 of Schedule 6 to the Local Government Act 2001”, respectively.
(2)(a) Subject to the modifications set out in subsections (3) to (6)(A), the provisions of the Tax Acts relating to capital allowances for industrial buildings or structures apply to qualifying multi-storey car parks, despite anything to the contrary in those provisions. Those provisions are so applied as if a qualifying multi-storey car park were, at all times it is a such a car park, an industrial building or structure within section 268(1)(a) (for example, a mill, factory or other similar premises). The reference to the qualifying premises being so treated “at all times at which it is a qualifying multi-storey car park” ensures that a change in the nature of the use of the premises (for example, to use as a private car park) will lead to a discontinuance of capital allowances.
(2)(a) The application of law relating to industrial buildings or structures is also subject to the provisions of sections 270(4), 270(5), 270(6) and section 316(2B). Under those sections, any capital expenditure incurred in the year 2007 and in the period 1 January 2008 to 31 July 2008 is subject to respective reductions to 75 per cent and 50 per cent of the relevant amount for the period involved. Where a building or structure is sold and section 279 applies, that section is applied in a modified way to reflect the restrictions. Finally, expenditure is treated as incurred in a period only to the extent that it is attributable to work actually carried out in that period (see notes on sections 270 and 316).
(2)(b) Allowances are available only in respect of capital expenditure incurred on the construction or refurbishment of a qualifying multi-storey car park during the qualifying period (see subsection (7)).
The effect of subsection (2)(a) is to make annual writing-down allowances of 4 per cent available under section 272 in respect of qualifying expenditure. By virtue of subsection (6), however, the writing-down allowances may have to be halved to 2 per cent. The writing-down allowances are available to both owner-occupiers and lessors of qualifying multi-storey car parks.
(3) Where capital expenditure is incurred in the qualifying period on refurbishment of a multi-storey car park, the allowances are available only if the amount of the expenditure so incurred is not less than 20 per cent of the market value (defined in section 339) of the car park immediately before the refurbishment.
(4)(a) An industrial building (initial) allowance of 50 per cent of qualifying expenditure is made available under section 271. By virtue of subsection (6), however, the initial allowance may have to be halved to 25 per cent. The initial allowance is available to both owner-occupiers and lessors of qualifying multi-storey car parks.
(4)(b) Free depreciation (an acceleration of the annual writing-down allowances) of up to 100 per cent of qualifying expenditure is made available under section 273. By virtue of subsection (6), however, the free depreciation entitlement may have to be halved to 50 per cent. Free depreciation is available only to owner-occupiers of qualifying multi-storey car parks.
(5) Where a sale or other event which normally might give rise to a balancing charge under section 274 occurs in relation to a qualifying multi-storey car park, a balancing charge is not to be made if that event occurs more than 13 years after the qualifying multi-storey car park was first used or, in the case where refurbishment expenditure on the qualifying multi-storey car park qualified for capital allowances, more than 13 years after that expenditure was incurred.
(6A) The halving of allowances (see below) will not apply as respects capital expenditure incurred after 31 July 1998 on the construction or refurbishment of a multi-storey car park unless a qualifying lease for double rent allowance purposes under section 345 is granted in respect of the car park involved.
(6)(a) In situations where the halving provision applies, only one-half of the writing-down allowances, industrial building (initial) allowance and free depreciation, which would otherwise apply, are available. In such cases, therefore, annual writing-down allowances of 2 per cent, an industrial building (initial) allowance of 25 per cent and free depreciation of 50 per cent are available in respect of qualifying capital expenditure incurred in the qualifying period and there is an overall cap of 50 per cent on the amount of such expenditure which can be written off. Any balancing allowance or charge arising is similarly restricted to one-half of the allowance or charge which would otherwise arise.
(6)(b) The allowances and charges are computed in the first place as if the one-half restriction did not apply and the resultant allowances or charges are then reduced by one-half.
(6)(c) The operation of section 274(8) is not affected by this mechanism. Thus, the amount of a balancing charge cannot exceed the amount of the capital allowances actually made to the taxpayer.
(7) The capital expenditure that is to be relieved under this section must be expenditure incurred on work carried out during the qualifying period. Where work commences, but is not completed, in the qualifying period, only the part of the expenditure referable to the work carried out in that period qualifies for relief.
This provision negates, for the purposes only of determining the amount of expenditure to be relieved under this section, other provisions of the Tax Acts which, by treating expenditure as incurred later than the carrying out of the work, might otherwise deprive a person of relief under this section. The provisions so negated are —
(8) It is not possible to obtain double relief in respect of capital expenditure incurred on the construction or refurbishment of a qualifying multi-storey car park. Where capital allowances are made in respect of such expenditure by virtue of this section, such allowances are not given for the same expenditure by virtue of any other provision of the Tax Acts.
Relevant Date: Finance Act 2019