Section 1251 | Car ... hire

(1)Subsection (2) applies if, in calculating the total profits of a company with investment business, a deduction is allowed under section 1219 for expenses incurred on the hiring of a car which is not—

(a)a car that is first registered before 1 March 2001,

(b)a car that has low CO2 emissions,

(c)a car that is electrically propelled, or

(d)a qualifying hire car.

(2)The amount of the deduction which would otherwise be allowable is reduced by 15%.

(3)Subsection (4) applies if a deduction for expenses is reduced as a result of subsection (2) (including as applied by section 82(4) of FA 2012), or a corresponding provision, and—

(a)subsequently—

(i)there is a rebate (however described) of the hire charges, or

(ii)a debt in respect of any of the hire charges is released otherwise than as part of a statutory insolvency agreement, and

(b)a credit representing the rebate, or the amount released, reverses (in whole or in part) a debit representing the expenses.

(4)In applying subsection (2) of section 1230 (calculation of the reversal amount for the purposes of the claw back rules)—

(a)take the amount given by Step 1,

(b)reduce that amount by 15% (instead of applying Step 2), and

(c)apply Step 3 to the amount given by paragraph (b).

(5)In this section “corresponding provision” means—

(a)section 56(2) (car ... hire: trade profits and property income), or

(b)section 48(2) of ITTOIA 2005 (car ... hire: trade profits and property income), ...

(c)Repealed

(6)Repealed

(7)Sections 57 (meaning of “car ...” and other expressions) and 58A (short-term hiring in and long-term hiring out) apply for the purposes of this section as they apply for the purposes of section 56.

(8)For the purposes of section 58B of this Act and section 50B of ITTOIA 2005 (connected persons: application of restrictions), this section is to be treated as if it were part of section 56 of this Act.