Capital Allowances Act 2001 section 419A

Unrelieved qualifying expenditure: entry to cash basis

Section 419A deals with how unrelieved qualifying expenditure is calculated when a person carrying on a mineral extraction trade switches to the cash basis of accounting.

• When a mineral extraction trader enters the cash basis, only the "non-cash basis deductible portion" of prior qualifying expenditure counts towards unrelieved qualifying expenditure
• The non-cash basis deductible portion is the amount of qualifying expenditure that would not be allowable as a deduction under cash basis rules, assuming it was paid in the tax year of entry to the cash basis
• This adjustment applies for the chargeable period ending with the basis period for the year of entry and for all subsequent chargeable periods
• The definitions of "enters the cash basis" and "calculating the profits of a trade on the cash basis" are taken from section 1A of the Capital Allowances Act 2001