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Capital Allowances Act 2001


492.This Chapter contains provisions relating to plant and machinery allowances and balancing charges arising in respect of expenditure on ships. Within the Chapter there are two main sets of provisions. These provide entitlement to:

  • postpone first-year and writing-down allowances arising on ships; and

  • defer balancing charges arising on the disposal of certain ships.

493.The first set of provisions deals with pooling of expenditure and postponement of allowances. These provisions allow first-year and writing-down allowances to be “stockpiled” and taken in subsequent chargeable periods. In order to achieve this:

  • sections 127 to 129 deal with the allocation of expenditure to single asset pools (“single ship pools”), the circumstances in which expenditure on ships must not be allocated to a single ship pool, and an election for expenditure to be allocated to a different pool;

  • sections 130 to 131 allow taxpayers to postpone allowances for single ship pools and to take them in future chargeable periods; and

  • sections 132 to 133 deal with disposal events in respect of single ship pools.

494.The second set of provisions deal with deferment of balancing charges:

  • section 134 introduces the deferment rules;

  • sections 135 to 139 set out when, how and how much of a balancing charge can be deferred;

  • sections 140 to 145 set out how to attribute new expenditure on ships with deferred balancing charges. They include rules attributing older balancing charges to older expenditure, the procedure for varying an attribution and the rules which apply if some of the conditions for attribution cease to be met;

  • sections 146 to 150 identify what counts as expenditure on new shipping; and

  • sections 151 to 154 identify ships which qualify for the deferment rules;

  • sections 155 and 156 allow the deferment rules to operate across a change in the person carrying on the qualifying activity and give “connected persons” a special, wider meaning for the purposes of the deferment rules.

495.Sections 157 and 158 provide for the Chapter to be given effect and apply the provisions of ICTA which decide if companies are members of the same group.

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