Capital Allowances - Pre-Trading Expenditure & Annual Investment Allowances

1. A taxpayer is incurring capital expenditure in a new SPV and their qualifying activity won’t start until the scheme completes and they begin to let the units. 2. S. 12 (1) CAA 2001 states “expenditure incurred for the purposes of a qualifying activity by a person about to carry on the activity is to be treated as if it had been incurred by him on the first day on which he carries on the activity” so the taxpayer is entitled to PMAs but cannot claim them until the qualifying activity commences. 3. S. 38A (4) CAA 2001 states “in determining whether expenditure is AIA qualifying expenditure, any effect of section 12 on the time at which it is to be treated as incurred is to be disregarded.” Does this mean that AIA will be denied for the pre-trading expenditure or does this mean that the pre-trading expenditure us AIA qualifying expenditure?

Hi,
 

It will still qualify for AIA as it is legitimately incuured expenditure

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Thank you .