This guidance describes the post-FA 2002 taxation of loan
relationships, derivative contracts and FOREX.
Furnish plc draws up accounts to 31 December each year in
dollars ($).
On the 1 September 2007, it incurs qualifying expenditure of
$1,500,000 on a new factory that will qualify for IBAs.
Assume no first year allowances are due. The writing-down
allowance will be 4% of $1,500,000, or $60,000, per annum. The
company will, in computing its Case I profit, deduct $20,000 in the
year to 31 December 2007, and $60,000 annually thereafter until the
year ended 31 December 2032 when it will claim the $40,000 balance
of expenditure.
If the factory is sold, the IBA balancing charge or allowance
will also be computed in dollars.
