(1) Where, on or after 1 April 2000, a company incurs qualifying expenditure on the purchase of capacity rights, there shall, subject to and in accordance with this Chapter, be made to that company writing-down allowances, in respect of that expenditure during the writing-down period; but no writing-down allowance shall be made to a company in respect of any expenditure unless -
(a) the allowance is to be made to the company in taxing the company's trade, or
(b) any income receivable by the company in respect of the rights would be liable to tax.
(a) Subject to paragraph (c), the writing-down period shall be -
(i) a period of 7 years, or
(ii) where the capacity rights are purchased for a specified period which exceeds 7 years, the number of years for which the capacity rights are purchased,
commencing with the beginning of the accounting period related to the expenditure.
(b) For the purposes of this section, writing-down allowances shall be determined by the formula -
where -
A is
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