Taxes Consolidation Act 1997 section 307

Corporation tax: allowances and charges in taxing a trade

Section 307 sets out how capital allowances and balancing charges are to be treated in computing a company's profits for corporation tax purposes, and provides for the option to disclaim certain allowances.

• Capital allowances are treated as trading expenses and balancing charges as trading receipts when computing a company's taxable profits for corporation tax
• This treatment means capital allowances are deducted, and balancing charges added, before arriving at the company's taxable trading profit or loss
• A company may disclaim an industrial building allowance under section 271, an initial allowance for machinery or plant under section 283, or an initial allowance for dredging under section 303, by written notice to the inspector within two years of the end of the relevant accounting period
• The disclaimer notice must be accompanied by a signed certificate showing that the allowance would have been due and stating the amount, after which the inspector may raise an assessment for the accounting period in question

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