Capital Allowances Act 2001 section 12

Expenditure incurred before qualifying activity carried on

Section 12 deals with the timing of capital expenditure that is incurred before a qualifying activity actually begins, including special rules for businesses that later establish a presence in Northern Ireland.

• Pre-trade capital expenditure is treated as incurred on the first day the qualifying activity commences.
• This re-dating rule ensures that capital allowances can be claimed from the start of the activity, rather than being lost because the spending occurred before the business was up and running.
• Where a company without a Northern Ireland regional establishment incurs expenditure on activities that would qualify as a Northern Ireland rate activity, and it subsequently becomes a NIRE company, the expenditure is re-dated to the first day of the first chargeable period in which it has NIRE status.
• A parallel rule applies to partnerships: if a partnership later becomes a Northern Ireland Chapter 7 firm, the relevant pre-qualifying expenditure is treated as incurred on the first day of the first chargeable period in which the partnership holds that status, for the purposes of the corporate partner calculation.