Schedule 26

[Section 842]

Replacement of Harbour Authorities by Port Companies

Definitions

par 1 “relevant port company” and “relevant transfer” are defined for the purposes of the Schedule by reference to provisions of the Harbours Act, 1996.

Capital allowances

par 2 Rules for determining capital allowances where the transfer of assets, etc has taken place provide —

• that the provisions apply for both income and corporation tax purposes,
• that the transfer does not give rise to any capital allowances or balancing charges, and
• that the new port company is to be entitled to the same capital allowances and be subject to the same balancing charges to which the harbour authority would have been entitled or been subject had there been no transfer of assets.

Capital Gains Tax

par 3 Provision is made to achieve, for capital gains tax purposes, a tax neutral result from the transfer of assets to the port companies by —

• ensuring that neither a gain nor a loss crystallises on the transfer of any assets in these particular circumstances,
• ensuring that, in the event of a subsequent disposal of the asset by the port company, any capital gains tax charge is to be calculated as though the port company had acquired the asset at the time and cost at which it was acquired by the harbour authority. (This ensures that no capital gains tax is lost by the transfer of assets), and
• ensuring that any gains of the harbour authority, deferred under the replacement of business assets scheme (rollover relief under section 597), does not crystallise on the transfer of assets to the port company. The harbour authority and the port company are treated as the same person. Gains deferred in this way by the harbour authority in respect of assets transferred to the port company, will ultimately be computed with reference to the acquisition cost by the harbour authority and indexed from that date.

Relevant Date: Finance Act 2021