Corporation Tax Act 2010 section 289

Reduction of expenditure by reference to regional development grant

Section 289 requires that where a company acquires an asset from a connected party, and the connected party's original expenditure on that asset was funded by a Northern Ireland regional development grant, the acquiring company must reduce its allowable expenditure by the amount of that grant.

• Applies where an asset is acquired in a transaction between connected persons or otherwise than at arm's length, as defined in Schedule 4 to OTA 1975
• The connected party's original expenditure on acquiring, creating or enhancing the asset must have been met (wholly or partly) by a Northern Ireland regional development grant
• That original expenditure must also qualify for capital allowances under Part 2 (plant and machinery) or Part 6 (research and development) of CAA 2001
• Where both conditions are met, the acquiring company's expenditure is reduced by the amount of the regional development grant for corporation tax purposes in relation to its ring-fenced oil activities trade