Finance Act, 2000

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Interpretation.

669A.—In this Chapter—

‘lessee’ has the same meaning as in Chapter 8 of Part 4;

‘levy’ means the levy referred to in Council Regulation (EEC) No. 3950 of 28 December 1992¹ , as amended;

‘milk’ means the produce of the milking of one or more cows and ‘other milk products’ includes cream, butter and cheese;

‘milk quota’ means—

(a) the quantity of a milk or other milk products which may be supplied by a person carrying on farming, in the course of a trade of farming land occupied by such person to a purchaser in a milk quota year without that person being liable to pay a levy, or

(b) the quantity of a milk or other milk products which may be sold or transferred free for direct consumption by a person carrying on farming, in the course of a trade of farming land occupied by such person in a milk quota year without that person being liable to pay a levy;

‘milk quota restructuring scheme’ means a scheme introduced by the Minister for Agriculture, Food and Rural Development under the provisions of Article 8(b) of Council Regulation (EEC) No. 3950 of 28 December 1992, as amended;

‘milk quota year’ means a twelve month period beginning on 1 April and ending on the following 31 March;

‘purchaser’ has the meaning assigned to it under Council Regulation (EEC) No. 3950 of 28 December 1992;

‘qualifying expenditure’ means—

(a) in the case of milk quota to which paragraph (a) of the definition of ‘qualifying quota’ refers, the amount of the capital expenditure incurred on the purchase of that qualifying quota, and

(b) in the case of milk quota to which paragraph (b) of the definition of ‘qualifying quota’ refers, the lesser of—

(i) the amount of capital expenditure incurred on the purchase of that qualifying quota, or

(ii) the amount of capital expenditure which would have been incurred on the purchase of that qualifying quota if the price paid were the maximum price for the milk quota year in which the purchase took place as set by the Minister for Agriculture, Food and Rural Development for the purposes of a Milk Quota Restructuring Scheme;

‘qualifying quota’ means—

(a) a milk quota purchased by a person on or after 1 April 2000 under a Milk Quota Restructuring Scheme, or

(b) a milk quota purchased by a lessee who entered into a lease agreement with a lessor who is not a person connected (within the meaning of section 10) with that lessee, in respect of that quota prior to 13 October 1999 and which ends on or after 31 March 2000 and which complies with the provisions of Council Regulation (EEC) No. 857-84\f\1\f\ of 31 March 1984 or Council Regulation (EEC) No. 3950 of 28 December 1992;

‘writing-down period’ has the meaning assigned to it by section 669B(2).

Annual allowances for capital expenditure on purchase of milk quota.

669B.—(1) Where, on or after 6 April 2000, a person incurs qualifying expenditure on the purchase of a qualifying quota, there shall, subject to and in accordance with this Chapter, be made to that person writing-down allowances during the writing-down period as specified in subsection (2); but no writing-down allowance shall be made to a person in respect of any qualifying expenditure unless the allowance is to be made to the person in taxing the person's trade of farming.

(2) The writing-down period referred to in subsection (1) shall be 7 years commencing with the beginning of the chargeable period related to the qualifying expenditure.

(3) The writing-down allowances to be made during the writing-down period referred to in subsection (2) in respect of qualifying expenditure shall be determined by the formula—

A x

C

where—

A is the amount of the capital expenditure incurred on the purchase of the milk quota,

B is the length of the part of the chargeable period falling within the writing-down period, and

C is the length of the writing-down period.

Effect of sale of quota.

669C.—(1) Where a person incurs qualifying expenditure on the purchase of a qualifying quota and, before the end of the writing-down period, any of the following events occurs—

(a) the person sells the qualifying quota or so much of the quota as the person still owns;

(b) the qualifying quota comes to an end or ceases altogether to be used;

(c) the person sells part of the qualifying quota and the net proceeds of the sale (in so far as they consist of capital sums) are not less than the amount of the qualifying expenditure remaining unallowed;

no writing-down allowance shall be made to that person for the chargeable period related to the event or any subsequent chargeable period.

(2) Where a person incurs qualifying expenditure on the purchase of a qualifying quota and, before the end of the writing-down period, either of the following events occurs—

(a) the qualifying quota comes to an end or ceases altogether to be used;

(b) the person sells all of the qualifying quota or so much of that quota as the person still owns, and the net proceeds of the sale (in so far as they consist of capital sums) are less than the amount of the qualifying expenditure remaining unallowed;

there shall, subject to and in accordance with this Chapter, be made to that person for the accounting period related to the event an allowance (in this Chapter referred to as a ‘balancing allowance’) equal to—

(i) if the event is the qualifying quota coming to an end or ceasing altogether to be used, the amount of the qualifying expenditure remaining unallowed, and

(ii) if the event is a sale, the amount of the qualifying expenditure remaining unallowed less the net proceeds of the sale.

(3) Where a person who has incurred qualifying expenditure on the purchase of a qualifying quota sells all or any part of that quota and the net proceeds of the sale (in so far as they consist of capital sums) exceed the amount of the qualifying expenditure remaining unallowed, if any, there shall, subject to and in accordance with this Chapter, be made on that person for the chargeable period related to the sale a charge (in this Chapter referred to as a ‘balancing charge’) on an amount equal to—

(a) the excess, or

(b) where the amount of the qualifying expenditure remaining unallowed is nil, the net proceeds of the sale.

(4) Where a person who has incurred qualifying expenditure on the purchase of a qualifying quota sells a part of that quota and subsection (3) does not apply, the amount of any writing-down allowance made in respect of that expenditure for the chargeable period related to the sale or any subsequent chargeable period shall be the amount determined by—

(a) subtracting the net proceeds of the sale (in so far as they consist of capital sums) from the amount of the expenditure remaining unallowed at the time of the sale, and

(b) dividing the result by the number of complete years of the writing-down period which remained at the beginning of the chargeable period related to the sale,

and so on for any subsequent sales.

(5) References in this section to the amount of any qualifying expenditure remaining unallowed shall in relation to any event be construed as references to the amount of that expenditure less any writing-down allowances made in respect of that expenditure for chargeable periods before the chargeable period related to that event, and less also the net proceeds of any previous sale by the person who incurred the expenditure of any part of the qualifying quota acquired by the expenditure, in so far as those proceeds consist of capital sums.

(6) Notwithstanding subsections (1) to (5)—

(a) no balancing allowance shall be made in respect of any expenditure unless a writing-down allowance has been, or, but for the happening of the event giving rise to the balancing allowance, could have been, made in respect of that expenditure, and

(b) the total amount on which a balancing charge is made in respect of any expenditure shall not exceed the total writing-down allowances actually made in respect of that expenditure less, if a balancing charge has previously been made in respect of that expenditure, the amount on which that charge was made.

Manner of making allowances and charges.

669D.—An allowance or charge under this Chapter shall be made to or on a person in taxing the profits or gains from farming but only if at any time in the chargeable period or its basis period the qualifying quota in question was used for the purposes of that trade.

Application of Chapter 4 of Part 9.

669E.—(1) Subject to subsection (2), Chapter 4 of Part 9 shall apply as if this Chapter were contained in that Part.

(2) In Chapter 4 of Part 9, as applied by virtue of subsection (1) to a qualifying quota, the reference in section 312(5)(a)(i) to the sum mentioned in paragraph (b) shall in the case of a qualifying quota be construed as a reference to the amount of the qualifying expenditure on the acquisition of the qualifying quota remaining unallowed, computed in accordance with section 669C.

Commencement (Chapter 3).

669F.—This Chapter shall come into operation on such day as the Minister for Finance, with the consent of the Minister for Agriculture, Food and Rural Development, may, by order, appoint.”.