HC Deb 11 May 1983 vol 42 cc838-9

`(1) Subject to provisions of subsection (5) below, where—

  1. (a) any person is, at the end of a chargeable period or its basis period, entitled to an interest in a building or structure, and
  2. (b) at the end of the said chargeable period or its basis period the building or structure is a commercial building or structure, and
  3. (c) that interest is the relevant interest in relation to the capital expenditure incurred on the construction of that building or structure.
an allowance (herein referred to as a "writing-down allowance") shall be made to him for the said chargeable period. (2) The writing-down allowance shall be equal to one-fiftieth of the expenditure mentioned in subsection (1)(c) above: Provided that no writing-down allowance shall be made for a chargeable period beginning after the period of fifty years commencing with the time when the building or structure was first used. (3) In this section "commercial building or structure" means a building or structure in use for the purposes of a trade, profession, vocation, office or employment, being neither an industrial building or structure nor a qualifying hotel. (4) The Tax Acts shall have effect as if this section were contained in Chapter I of Part I of the Capital Allowance Act 1968. (5) This section has effect in relation to expenditure incurred after 9th May 1983 and to expenditure which by virtue of section 5(1) of the said Act of 1968 (purchase of unused buildings or structures) is deemed to have been incurred after that date; but expenditure shall not be treated for the purposes of this section as having been incurred by reason only of section 1(6) of that Act (expenditure incurred before trade begins): .—[Mr. Viggers.]

Brought up, and read the First time.

Mr. Viggers

I beg to move, That the clause be read a Second time.

The selection of the new clause allows me to remind my right hon. and hon. Friends that the basis for capital allowances for buildings was set as long ago as 1945, when it was decided that industrial buildings should be eligible for capital allowances and that commercial buildings should not be eligible. A change was made in 1978, when hotels were made eligible for capital allowances. Lord Radcliffe's committee suggested that commercial buildings should also be eligible. I ask my hon. Friend the Minister to say that the Government will remain flexible in their thinking in this important area.

Mr. Wakeham

It is generally accepted that in principle there is a case for extending capital allowances to commercial buildings on the strength of the argument recognised in the Government's recent Green Paper on corporation tax. The main problem is cost. I appreciate that my hon. Friend's new clause would not cost much in the initial years, but it would build up to a substantial cost. In the responses to the Green Paper there was no general consensus about the future of the capital allowances system. Many representations were in favour of capital allowances for commercial buildings. But the Government looked for any restructuring to be on a revenue-neutral basis and there was little outside support for the reduction in other allowances to pay for the new allowance. The practical need for capital allowances for commercial buildings is in some ways less clear-cut than for other assets. Commercial buildings wear out slowly and, far from losing value, many increase in value substantially. My hon. Friend will know that this is one of the things that the Government will keep constantly in mind. I do not recommend his new clause to the Committee.

Mr. Viggers

I am grateful to my hon. Friend for his helpful remarks. I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Schedules I to 5 agreed to. Schedules 6 to 9 disagreed to.

Schedule 10 agreed to.

Schedule 12 agreed to.

Schedules 13 to 17 disagreed to.

Schedule 18 agreed to.

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