OTHER SPECIAL PROVISIONS

PART 23

Farming and Market Gardening

Chapter 1

Interpretation and general

654. —In this Part other than in section 664 —

“farming” means farming farm land, that is, land in the State wholly or mainly occupied for the purposes of husbandry, other than market garden land;

“market garden land” means land in the State occupied as a nursery or garden for the sale of the produce (other than land used for the growth of hops), and “market gardening” shall be construed accordingly;

“occupation”, in relation to any land other than market garden land, means having the use of that land or having the right by virtue of any easement (within the meaning of section 96 ) to graze livestock on that land.

655. —(1) For the purposes of the Tax Acts, farming shall be treated as the carrying on of a trade or, as the case may be, of part of a trade, and the profits or gains of farming shall be charged to tax under Case I of Schedule D.

(2) Notwithstanding anything to the contrary in Part 43 , farming carried on by any person, whether solely or in partnership, shall be treated as the carrying on of a single trade; but this subsection shall not prejudice or restrict the operation of Chapter 3 of Part 4 where a partnership trade of farming is set up and commenced or is permanently discontinued.

(3) Market gardening shall, for the purposes of the Tax Acts in relation to the person by whom it is carried on, be treated as a trade, and the profits or gains of market gardening shall be charged to tax under Case I of Schedule D.

656. —(1) In this section, “specified return date for the chargeable period” has the same meaning as in section 950 .

(2) Where trading stock of a trade of farming is transferred by a farmer (in this subsection referred to as “the transferor”) to another farmer (in this subsection referred to as “the transferee”), the transferor and the transferee may jointly elect that—

(a) section 89 (2)(b) shall not apply, and

(b) in computing their respective profits or gains from farming, the transferor and the transferee shall include such stock at the value at which the stock is included in the accounts of the transferor at the date of discontinuance,

and such election shall be made in writing on or before the specified return date for the chargeable period in which the stock is transferred.

657. —(1) In this section—

“an individual to whom subsection (1) applies” means an individual carrying on farming in a year of assessment and—

(a) who at any time in the year of assessment is also carrying on either solely or in partnership another trade or profession,

(b) whose spouse, in a case where the individual is a married person, is at any time in the year of assessment also carrying on either solely or in partnership another trade or profession, other than a trade consisting solely of the provision of accommodation in buildings on the farm land occupied by the individual, the provision of such accommodation being ancillary to the farming of that farm land,

(c) who at any time in the year of assessment is a director of a company carrying on a trade or profession and is either the beneficial owner of, or able, either directly or through the medium of other companies or by any other means, to control, more than 25 per cent of the ordinary share capital of the company, or

(d) whose spouse, in a case where the individual is a married person, is at any time in the year of assessment a director of a company carrying on a trade or profession and is either the beneficial owner of, or able, either directly or through the medium of other companies or by any other means, to control, more than 25 per cent of the ordinary share capital of the company,

but paragraphs (b) and (d) shall not apply in a case where the wife of an individual is treated for tax purposes as not living with her husband;

“company” means a company within the meaning of the Companies Act, 1963;

“director” includes a person holding any office or employment under a company.

(2) The definition of “an individual to whom subsection (1) applies” shall apply in the case of a married person whose wife is carrying on farming, and shall apply in such a case as if the references to the individual were references to the individual's wife.

(3) For the purposes of paragraphs (c) and (d) of the definition of “an individual to whom subsection (1) applies”, ordinary share capital which is owned or controlled in the manner referred to in those paragraphs by a person, being the spouse or a minor child of a director, or by the trustee of a trust for the benefit of a person or persons, being or including any such person or such director, shall be deemed to be owned or controlled by such director and not by any other person.

(4) (a) Subject to paragraph (b), where an assessment in respect of profits or gains from farming is made for any year of assessment on an individual, other than an individual to whom subsection (1) applies, the individual may on giving notice in writing to that effect to the inspector within 30 days after the date of the notice of assessment elect to be charged to income tax for that year in respect of those profits or gains in accordance with subsection (5), and—

(i) the Income Tax Acts shall apply in relation to the assessment as if the notice given to the inspector were a notice of appeal against the assessment under section 933 , and

(ii) the assessment shall be amended as necessary so as to give effect to the election so made by the individual.

(b) This subsection shall not apply as respects any year of assessment where for either of the 2 immediately preceding years of assessment the individual was not charged to tax in respect of profits or gains from farming in accordance with section 65 (1).

(5) (a) An individual who is to be charged to income tax for a year of assessment in respect of profits or gains from farming in accordance with this subsection shall be so charged under Case I of Schedule D on the full amount of those profits or gains determined on a fair and just average of the profits or gains from farming of the individual in each of the 3 years ending on the date in the year of assessment to which it has been customary to make up accounts or, where it has not been customary to make up accounts, on the 5th day of April in the year of assessment.

(b) Any profits or gains arising to, and any loss sustained by, the individual in the 3 years referred to in paragraph (a) in the carrying on of farming shall be aggregated for the purposes of this subsection.

(6) (a) Subject to paragraph (b) and subsection (7), where as respects a year of assessment an individual duly elects in accordance with subsection (4), the individual shall be charged to income tax for that year and for each subsequent year of assessment in respect of profits or gains from farming in accordance with subsection (5).

(b) This subsection shall not apply for any year of assessment in which the individual—

(i) is an individual to whom subsection (1) applies, or

(ii) is not chargeable to tax on profits or gains from farming.

(7) Where for a year of assessment an individual is by virtue of subsection (6) chargeable to income tax in respect of profits or gains from farming in accordance with subsection (5) and the individual was so chargeable for each of the 3 years of assessment immediately preceding the year of assessment, he or she may, by notice in writing given to the inspector with the return required under section 951 for the year of assessment, elect to be charged to tax for that year of assessment in accordance with Chapter 3 of Part 4 ; but, where in the case of an individual subsection (6) does not apply for any year of assessment by reason of paragraph (b)(i) of that subsection, the individual shall be deemed to be entitled to elect and to have duly elected, as respects that year of assessment, in accordance with this subsection.

(8) Where as respects a year of assessment an individual duly elects or is deemed to have elected in accordance with subsection (7)—

(a) the individual shall be charged to income tax for that year and for each subsequent year of assessment in accordance with Chapter 3 of Part 4 , and

(b) there shall be made such assessment or assessments, if any, as may be necessary to secure that the amount of profits or gains from farming on which the individual is charged for each of the 2 years of assessment immediately preceding the year preceding the year of assessment, as respects which the individual elects or is deemed to have elected in accordance with subsection (7), shall be not less than the amount on which the individual is charged by virtue of subsection (6) in accordance with subsection (5) for the year preceding the year of assessment.

(9) In determining for any year of assessment what capital allowances, balancing allowances or balancing charges are to be made to or on an individual in taxing a trade of farming in accordance with subsection (5), the individual shall be deemed to be chargeable for that year of assessment in respect of the profits or gains of the trade in accordance with section 65 (1).

(10) Nothing in this section shall prejudice or restrict the operation of section 67 in any case where a trade of farming is permanently discontinued.

(11) Where for any year of assessment a loss is aggregated with profits or gains in accordance with subsection (5)(b) and the amount of the loss is in excess of the profits or gains, one-third of the amount of such excess shall be deemed for the purposes of Chapter 1 of Part 12 to be a loss sustained in the trade of farming in the final year of the 3 years on the average of the profits or gains of which the individual is to be charged to tax for that year of assessment, and any loss so aggregated shall not be eligible for relief under any provision of the Income Tax Acts apart from this subsection.

(12) The profits or gains from farming on which an individual is to be charged to tax for any year of assessment by virtue of subsection (6) in accordance with subsection (5) shall be deemed to be the profits or gains from farming of that individual in determining his or her total income for that year for the purposes of the Income Tax Acts apart from this section, and any provision of those Acts relating to the delivery of any return, account (including balance sheet), statement, declaration, book, list or other document or the furnishing of any particulars shall apply as if this section had not been enacted.

658. —(1) This section shall apply to any person carrying on farming, the profits or gains of which are chargeable to tax in accordance with section 655 .

(2) (a) Where a person to whom this section applies incurs, for the purpose of a trade of farming land occupied by such person, any capital expenditure on the construction of farm buildings (excluding a building or part of a building used as a dwelling), fences, roadways, holding yards, drains or land reclamation or other works, there shall be made to such person during a writing-down period of 7 years beginning with the chargeable period related to that expenditure, writing-down allowances (in this section referred to as “farm buildings allowances”) in respect of that expenditure and such allowances shall be made in taxing the trade.

(b) As respects each of the first 6 years of the writing-down period, the farm buildings allowance to be made under this subsection shall be 15 per cent of the capital expenditure referred to in paragraph (a) and, as respects the last year of the writing-down period, the farm buildings allowance to be made under this subsection shall be 10 per cent of that expenditure.

(c) Where the capital expenditure referred to in paragraph (a) was incurred before the 27th day of January, 1994, this section shall apply subject to paragraph 23 of Schedule 32 .

(3) For the purposes of the application to this section of section 321 , “basis period” has the meaning assigned to it by section 306 .

(4) Where for any year of assessment an individual is not chargeable to income tax in respect of profits or gains from farming in accordance with Chapter 3 of Part 4 , and that year is a year of assessment in respect of which, if the individual had been so chargeable, he or she could have claimed a farm buildings allowance under this section, that allowance shall for the purposes of this section be deemed to have been made for that year of assessment and shall not be carried forward and set off against profits or gains chargeable for any subsequent year of assessment.

(5) Any capital expenditure incurred by a person about to carry on farming but before commencing farming shall for the purposes of this section be treated as if it had been incurred on the first day on which the person commences farming.

(6) Any claim for a farm buildings allowance to be made to a person under this section shall be included in the annual statement required to be delivered by the person under the Income Tax Acts of the profits or gains from farming, and section 304 (4) shall apply in relation to the allowance as it applies in relation to allowances to be made under Part 9 .

(7) Any claim for a farm buildings allowance under this section shall be made to and determined by the inspector, but any person aggrieved by any decision of the inspector on any such claim may, on giving notice in writing to the inspector within 21 days after the notification to that person of the decision, appeal to the Appeal Commissioners.

(8) The Appeal Commissioners shall hear and determine an appeal to them made under subsection (7) as if it were an appeal against an assessment to tax, and the provisions of the Income Tax Acts relating to the rehearing of an appeal and to the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications.

(9) Subject to subsection (10), where a person who is entitled to a farm buildings allowance under this section in respect of capital expenditure incurred for the purpose of farming farm land transfers such person's interest in that farm land or any part of that farm land to another person, that other person shall, to the exclusion of the first-mentioned person, be entitled to the allowances under this section for the chargeable periods following the chargeable period in which the transfer of interest took place.

(10) Where the transfer of interest to which subsection (9) refers takes place in relation to part of the farm land, subsection (9) shall apply to so much of the allowance as is properly referable to that part of the land as if it were a separate allowance.

(11) Where expenditure is incurred partly for the purposes of farming and partly for other purposes, subsection (2) shall apply to so much only of that expenditure as on a just apportionment ought fairly to be treated as incurred for the purposes of farming.

(12) No farm buildings allowance shall be made by virtue of this section in respect of any expenditure if for the same or any other chargeable period an allowance is or has been made in respect of that expenditure under Chapter 1 of Part 9 .

(13) Expenditure shall not be regarded for the purposes of this section as having been incurred by a person in so far as it has been or is to be met directly or indirectly by the State or by any person other than the first-mentioned person.

659. —(1) This section shall apply to any person—

(a) carrying on farming, the profits or gains of which are chargeable to tax in accordance with section 655 ,

(b) for whom, in respect of capital expenditure to which paragraph (c) refers and in respect of farm land occupied by him or her, a farm nutrient management plan has been drawn up by an agency or planner approved to draw up such plans by the Department of Agriculture and Food, and drawn up in accordance with—

(i) the guidelines in relation to such plans entitled “Farm Nutrient Management Plan” issued by the Department of Agriculture, Food and Forestry on the 21st day of March, 1997, or

(ii) a plan drawn up under the scheme known as the Rural Environment Protection Scheme (REPS) or the scheme known as the Erne Catchment Nutrient Management Scheme, both being schemes administered by the Department of Agriculture and Food,

and

(c) who incurs capital expenditure on or after the 6th day of April, 1997, and before the 6th day of April, 2000, on the construction of those farm buildings (excluding a building or part of a building used as a dwelling) or structures specified in the Table to this section in the course of a trade of farming land occupied by such person where such building or structures are constructed in accordance with that farm nutrient management plan and are certified as being necessary by that agency or planner for the purpose of securing a reduction in or the elimination of any pollution arising from the trade of farming.

(2) Subject to the provisions of Article 6 of Council Regulation (EEC) No. 2328/91 of 15 July 19911 on improving the efficiency of agricultural structures, as amended, and subject to subsection (3), where a person to whom this section applies—

(a) has delivered to the Department of Agriculture and Food, a farm nutrient management plan referred to in subsection (1)(b), and

(b) incurs capital expenditure to which subsection (1) applies,

there shall be made to such person during a writing-down period of 8 years beginning with the chargeable period related to that expenditure, writing-down allowances (in this section referred to as “farm pollution control allowances”) in respect of that expenditure and such allowances shall be made in taxing the trade.

(3) The farm pollution control allowances to be made in accordance with subsection (2) in respect of capital expenditure incurred in a chargeable period shall be—

(a) as respects the first year of the writing-down period referred to in subsection (2)—

(i) where the capital expenditure incurred has not exceeded £20,000, an amount equal to 50 per cent of that expenditure, or

(ii) where the capital expenditure incurred has exceeded £20,000, an amount equal to £10,000,

(b) as respects the next 6 years of that writing-down period, an amount equal to 15 per cent of the balance of that expenditure after deducting the amount of any allowance made by virtue of paragraph (a), and

(c) as respects the last year of that writing-down period, an amount equal to 10 per cent of the balance of that expenditure after deducting the amount of any allowance made by virtue of paragraph (a).

(4) For the purposes of the application to this section of section 321 , “basis period” has the meaning assigned to it by section 306 .

(5) Any claim by a person for a farm pollution control allowance to be made to such person shall be included in the annual statement required to be delivered under the Income Tax Acts of the profits or gains from farming, and section 304 (4) shall apply in relation to the allowance as it applies in relation to allowances to be made under Part 9 .

(6) Any claim for a farm pollution control allowance shall be made to and determined by the inspector, but any person aggrieved by any decision of the inspector on any such claim may, on giving notice in writing to the inspector within 21 days after the notification to the person of the decision, appeal to the Appeal Commissioners.

(7) The Appeal Commissioners shall hear and determine an appeal to them made under subsection (6) as if it were an appeal against an assessment to tax, and the provisions of the Income Tax Acts relating to the rehearing of an appeal and to the statement of a case for the opinion of the High Court on a point of law shall apply accordingly with any necessary modifications.

(8) Subject to subsection (9), where a person who is entitled to farm pollution control allowances in respect of farm land occupied by the person transfers his or her interest in that farm land or any part of that farm land to another person, that other person shall, to the exclusion of the first-mentioned person, be entitled to the allowances under this section for the chargeable periods following the chargeable period in which the transfer of interest took place.

(9) Where the transfer of interest to which subsection (8) refers took place in relation to part of the farm land, subsection (8) shall apply to so much of the farm pollution control allowance as is properly referable to that part of the land as if it were a separate allowance.

(10) Where expenditure is incurred partly for a purpose for which a farm pollution control allowance is to be made and partly for another purpose, subsection (2) shall apply to so much only of that expenditure as on a just apportionment ought fairly to be treated as incurred for the first-mentioned purpose.

(11) No farm pollution control allowance shall be made in respect of any expenditure if for the same or any other chargeable period an allowance is or has been made in respect of that expenditure under Chapter 1 of Part 9 or section 658 .

(12) Expenditure shall not be regarded for the purposes of this section as having been incurred by a person in so far as it has been or is to be met directly or indirectly by the State or by any person other than the first-mentioned person.

(13) For the purposes only of determining, in relation to a claim for a farm pollution control allowance, whether and to what extent capital expenditure incurred on the construction of a building or structure to which this section applies is incurred or not incurred in the period specified in subsection (1)(c), only such an amount of that capital expenditure as is properly attributable to work on the construction of the building or structure actually carried out during that period shall (notwithstanding any other provision of the Tax Acts as to the time when any capital expenditure is or is to be treated as incurred) be treated as having been incurred in that period.

TABLE

Farm Buildings and Structures to Which Allowances for the Control of Pollution Apply

1. Waste storage facilities including slurry tanks.

2. Soiled water tanks.

3. Effluent tanks.

4. Tank fences and covers.

5. Dungsteads and manure pits.

6. Yard drains for storm and soiled water removal.

7. Walled silos, silage bases and silo aprons.

8. Housing for cattle, including drystock accommodation, byres, loose houses, slatted houses, sloped floor houses and kennels, roofed feed or exercise yards where such houses or structures eliminate soiled water.

9. Housing for sheep and unroofed wintering structures for sheep and sheep dipping tanks.

660. —(1) In this section—

“balancing allowance” and “balancing charge” have the same meanings respectively as in Chapter 2 of Part 9 ;

“wear and tear allowance” means an allowance made under section 284 .

(2) In determining whether any, and if so what, wear and tear allowance, balancing allowance or balancing charge in respect of machinery or plant is to be made to or on any person for any chargeable period in taxing a trade of farming, there shall be deemed to have been made to that person, for every previous chargeable period in which the machinery or plant belonged to that person and which is a chargeable period to be taken into account for the purpose of this section, such wear and tear allowance or greater wear and tear allowance, if any, in respect of the machinery or plant as would have been made to that person if, in relation to every such previous chargeable period—

(a) the profits or gains from farming had been chargeable to tax under Case I of Schedule D,

(b) those profits or gains had been charged to tax in accordance with section 58 of the Income Tax Act, 1967 , and not in an amount determined under section 21 of the Finance Act, 1974 ,

(c) farming had been carried on by that person since the date on which that person acquired the machinery or plant,

(d) the machinery or plant had been used by that person solely for the purposes of farming since that date, and

(e) a proper claim had been duly made by that person for wear and tear allowance in respect of the machinery or plant for every relevant chargeable period.

(3) There shall be taken into account for the purposes of this section every previous chargeable period in which the machinery or plant concerned belonged to the person and—

(a) during which the machinery or plant was not used by the person for the purposes of farming,

(b) in respect of which the person was charged to tax on an amount determined in accordance with section 21 of the Finance Act, 1974 ,

(c) during which farming was not carried on by the person, or

(d) during which farming was carried on by the person in such circumstances that the full amount of the profits or gains of farming was not liable to be charged to tax under Case I of Schedule D.

(4) In the case of a company (within the meaning of section 4 (1)), subsection (2)(c) shall not alter the periods which are to be taken as chargeable periods but, if during any period after the 5th day of April, 1976, and after the company acquired the machinery or plant, the company has not been within the charge to corporation tax, any year of assessment or part of a year of assessment falling within that period shall be taken as a chargeable period as if it had been an accounting period of the company.

(5) Nothing in this section shall affect section 288 (4).

661. —(1) This section shall apply to a loss sustained by a person in the carrying on of farming in any year of assessment, being a year for which such person was not chargeable to tax in respect of profits or gains from farming.

(2) No relief shall be given under section 382 in respect of a loss to which this section applies by deducting such loss from or setting it off against the amount of the profits or gains from farming assessed for any year of assessment.

662. —(1) In this section—

“prior 3 years”, in relation to a loss incurred in a year of assessment, means the last 3 years of assessment before that year;

“prior period of loss” means the prior 3 years or, if losses were incurred in successive years of assessment amounting in the aggregate to a period longer than 3 years (and ending when the prior 3 years end), that longer period.

(2) (a) Any loss (including any amount in respect of allowances which by virtue of section 392 is to be treated as a loss) incurred in a trade of farming or market gardening shall not be available for relief under section 381 unless it is shown that, for the year of assessment in which the loss is claimed to have been incurred, the trade was being carried on on a commercial basis and with a view to the realisation of profits in the trade.

(b) Without prejudice to paragraph (a), any loss (including any amount in respect of allowances which by virtue of section 392 is to be treated as a loss) incurred in any year of assessment in a trade of farming or market gardening shall not be available for relief under section 381 if in each of the prior 3 years a loss was incurred in carrying on that trade.

(c) For the purposes of this section, the fact that a trade of farming or market gardening was being carried on at any time so as to afford a reasonable expectation of profit shall be conclusive evidence that it was then being carried on with a view to the realisation of profits.

(d) This subsection shall not restrict relief for any loss or any capital allowance where it is shown by the claimant—

(i) that the whole of the claimant's farming or market gardening activities in the year following the prior 3 years are of such a nature, and carried on in such a way, as would have justified a reasonable expectation of the realisation of profits in the future if those activities had been undertaken by a competent farmer or market gardener, and

(ii) that if such farmer or market gardener had undertaken those activities at the beginning of the prior period of loss, such farmer or market gardener could not reasonably have expected those activities to become profitable until after the end of the year following the prior period of loss.

(e) This subsection shall not restrict relief where the carrying on of the trade forms part of and is ancillary to a larger trading undertaking.

(3) In ascertaining for the purposes of this section whether a loss was incurred in any year, the rules applicable to Case I of Schedule D shall be applied.

(4) Where a trade of farming or market gardening is or is to be treated as being carried on for a part only of a year of assessment by reason of its being set up and commenced, or discontinued, or both, in that year, subsection (2) shall apply in relation to that trade as regards that part of that year.

(5) subsection (2) shall not restrict relief for any loss or capital allowance if the trade was set up and commenced within the prior 3 years, and for the purposes of this subsection a trade shall be treated as discontinued and a new trade set up in any event which under the Income Tax Acts is to be treated as equivalent to the permanent discontinuance or setting up of a trade.

(6) Notwithstanding subsection (5), where at any time there has been a change in the persons engaged in carrying on a trade of farming or market gardening, this section shall apply to any person who was engaged in carrying on the trade immediately before and immediately after the change as if the trade were the same before and after the change without any discontinuance and as if a person and another person with whom such person is connected were the same person.

663. —(1) In this section—

“prior 3 years”, in relation to a loss incurred in an accounting period, means the last 3 years before the beginning of the accounting period.

“prior period of loss” means the prior 3 years or, if losses were incurred in successive accounting periods amounting in all to a period longer than 3 years (and ending when the prior 3 years end), that longer period.

(2) (a) Any loss incurred in a trade of farming or market gardening shall not be available for relief under section 396 (2) unless it is shown that, for the accounting period in which the loss is claimed to have been incurred, the trade was being carried on on a commercial basis and with a view to the realisation of profits in the trade.

(b) (i) In this paragraph, “loss computed without regard to capital allowances” means a loss ascertained in accordance with the rules of Case I of Schedule D but so that, notwithstanding sections 307 and 308 , no account shall be taken of any allowance or charge which otherwise would be taken into account under those sections.

(ii) Without prejudice to paragraph (a), any loss incurred in any accounting period in a trade of farming or market gardening shall not be available for relief under section 396 (2) if a loss computed without regard to capital allowances was incurred in carrying on that trade in that accounting period and in each of the accounting periods wholly or partly comprised in the prior 3 years.

(c) For the purposes of this section, the fact that a trade of farming or market gardening was being carried on at any time so as to afford a reasonable expectation of profit shall be conclusive evidence that it was then being carried on with a view to the realisation of profits.

(d) This subsection shall not restrict relief for any loss where it is shown by the claimant company—

(i) that the whole of its farming or market gardening activities in the year following the prior 3 years are of such a nature, and carried on in such a way, as would have justified a reasonable expectation of the realisation of profits in the future if those activities had been undertaken by a competent farmer or market gardener, and

(ii) that if such farmer or market gardener had undertaken those activities at the beginning of the prior period of loss, such farmer or market gardener could not reasonably have expected those activities to become profitable until after the end of the year following the prior period of loss.

(e) This subsection shall not restrict relief where the carrying on of the trade forms part of and is ancillary to a larger trading undertaking.

(3) subsection (2) shall not restrict relief for any loss if the trade was set up and commenced within the prior 3 years, and for the purposes of this subsection a trade shall be treated as discontinued and a new trade set up in any event which under the Tax Acts is to be treated as equivalent to the permanent discontinuance or setting up of a trade; but a trade shall not be treated as discontinued if under section 400 (6) it is not to be treated as discontinued for the purpose of capital allowances and charges.

(4) Where a trade of farming or market gardening is or is to be treated as being carried on for a part only of an accounting period by reason of its being set up and commenced, or discontinued, or both, in that accounting period, subsection (2) shall apply in relation to that trade as regards that part of that accounting period.

(5) Notwithstanding subsection (3), where at any time there has been a change in the persons engaged in carrying on a trade of farming or market gardening, this section shall apply to any person, who was engaged in carrying on the trade immediately before and immediately after the change as if the trade were the same before and after the change without any discontinuance and as if a person and another person with whom such person is connected were the same person, and accordingly relief from corporation tax may be restricted under this section by reference to losses some of which are incurred in years of assessment and some, computed without regard to capital allowances, are incurred in a company's accounting periods.

664. —(1) (a) In this section—

“farm land” means land in the State wholly or mainly occupied for the purposes of husbandry and includes a building (other than a building or part of a building used as a dwelling) situated on the land and used for the purposes of farming that land;

“lease”, “lessee”, “lessor” and “rent” have the same meanings respectively as in Chapter 8 of Part 4 ;

“qualifying lease” means a lease of farm land which is—

(i) in writing or evidenced in writing,

(ii) for a definite term of 5 years or more, and

(iii) made on an arm's length basis between a qualifying lessor or qualifying lessors and a lessee or lessees who is, or each of whom is, a qualifying lessee in relation to the qualifying lessor or the qualifying lessors;

“qualifying lessee”, in relation to a qualifying lessor or qualifying lessors, means an individual—

(i) who is not connected with the qualifying lessor or with any of the qualifying lessors, and

(ii) who uses any farm land leased by him or her from the qualifying lessor or the qualifying lessors for the purposes of a trade of farming carried on by him or her solely or in partnership;

“qualifying lessor” means an individual who—

(i) is aged 55 years or over or is permanently incapacitated by reason of mental or physical infirmity from carrying on a trade of farming, and

(ii) has not after the 30th day of January, 1985, leased the farm land which is the subject of the qualifying lease from a person or persons, who is or are, or one of whom is, connected with him or her, on terms which are not such as might have been expected to be included in a lease if the negotiations for the lease had been at arm's length;

“the specified amount”, in relation to any surplus or surpluses (within the meaning of section 97 (1)) arising in respect of the rent or the rents from any farm land let under a qualifying lease or qualifying leases, means, subject to paragraph (b), the lesser of—

(i) the amount of that surplus or the aggregate amount of those surpluses,

(ii) as respects a qualifying lease or qualifying leases made—

(I) in the period beginning on the 6th day of April, 1985, and ending on the 19th day of January, 1987, £2,000,

(II) in the period beginning on the 20th day of January, 1987, and ending on the 31st day of December, 1987, £2,800,

(III) in the period beginning on the 1st day of January, 1988, and ending on the 29th day of January, 1991, £2,000,

(IV) in the period beginning on the 30th day of January, 1991, and ending on the 22nd day of January, 1996—

(A) £4,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(B) £3,000, in any other case, or

(V) on or after the 23rd day of January, 1996—

(A) £6,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(B) £4,000, in any other case,

and

(iii) where the rent or rents was or were not receivable in respect of a full year's letting or lettings, such amount as bears to the amount determined in accordance with clause (I), (II), (III), (IV) or (V), as may be appropriate, of subparagraph (ii) the same proportion as the amount of the rent or the aggregate amount of the rents bears to the amount of the rent or the aggregate amount of the rents which would be receivable for a full year's letting or lettings.

(b) Where the income of a qualifying lessor consists of or includes rent or rents—

(i) from a qualifying lease or qualifying leases made in the period beginning on the 20th day of January, 1987, and ending on the 31st day of December, 1987, and from a qualifying lease made—

(I) in the period beginning on the 6th day of April, 1985, and ending on the 19th day of January, 1987, or

(II) in the period beginning on the 1st day of January, 1988, and ending on the 29th day of January, 1991,

the specified amount shall not exceed £2,800;

(ii) from a qualifying lease or qualifying leases made in the period beginning on the 30th day of January, 1991, and ending on the 22nd day of January, 1996, and from a qualifying lease made before the 30th day of January, 1991, the specified amount shall not exceed—

(I) £4,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(II) £3,000, in any other case;

(iii) from a qualifying lease or qualifying leases made on or after the 23rd day of January, 1996, and from a qualifying lease made at any other time, the specified amount shall not exceed—

(I) £6,000, in a case where the qualifying lease or qualifying leases is or are for a definite term of 7 years or more, and

(II) £4,000, in any other case.

(2) Where for any year of assessment—

(a) the total income of a qualifying lessor consists of or includes any profits or gains chargeable to tax under Case V of Schedule D, and

(b) any surplus or surpluses (within the meaning of section (97) (1)) arising in respect of the rent or rents from any farm land let under a qualifying lease or qualifying leases has been or have been taken into account in computing the amount of those profits or gains,

the qualifying lessor shall in determining that total income be entitled to a deduction of the lesser of—

(i) the specified amount in relation to the surplus or surpluses, and

(ii) the amount of the profits or gains.

(3) The amount of any deduction due under subsection (2) shall—

(a) where by virtue of section 1017 a woman's income is deemed to be her husband's income, be determined separately as regards the part of his income which is his by virtue of that section and the part which is his apart from that section, or

(b) where by virtue of section 1017 a man's income is deemed to be his wife's income, be determined separately as regards the part of her income which is hers by virtue of that section and the part which is hers apart from that section,

and where section 1023 applies any deduction allowed by virtue of subsection (2) shall be allocated to the person and to his or her spouse as if they were not married.

(4) (a) For the purposes of subsection (2), where a single qualifying lease relates to both farm land and other property, goods or services, only such amount, if any, of the surplus arising in respect of the rent payable under the lease as is determined by the inspector and after such apportionments of rent, expenses and other deductions as are necessary, according to the best of the inspector's knowledge and judgment, to be properly attributable to the lease of the farm land shall be treated as a surplus arising in respect of a rent from farm land let under a qualifying lease.

(b) Any amount which by virtue of paragraph (a) is determined by the inspector may be amended by the Appeal Commissioners or by the Circuit Court on the hearing or the rehearing of an appeal against that determination.

(5) For the purposes of determining the amount of any relief to be granted under this section, the inspector may by notice in writing require the lessor to furnish such information as the inspector considers necessary.

(6) (a) Subsections (1) and (2) of section 459 and section 460 shall apply to a deduction under this section as they apply to any allowance, deduction, relief or reduction under the provisions specified in the Table to section 458 .

(b) Subsections (3) and (4) of section 459 and paragraph 8 of Schedule 28 shall, with any necessary modifications, apply in relation to a deduction under this section.

¹O.J. No. L218 of 6.8.1991, p. 1.