Capital Allowances Act 2001 section 431C

Notional allowances

Section 431C deals with the automatic calculation of notional mineral extraction allowances for assets used in a foreign permanent establishment when a company has elected for the foreign permanent establishment exemption.

• Where a company has elected for the foreign PE exemption and would otherwise have been entitled to mineral extraction allowances on assets used in a foreign PE, a notional allowance is calculated automatically.
• The notional allowance, together with any related balancing charge, is reflected in the computation of profits or losses attributable to the foreign PE for each relevant accounting period.
• If, when the election takes effect, the company is required to bring a disposal value into account for a foreign PE asset, the company is treated as having incurred new qualifying expenditure equal to that disposal value at that point in time.
• A relevant accounting period is one that ends before, but not more than six years before, the relevant day as defined by the applicable regulations.