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Capital Allowances Act 2001

Section 139: Amount taken into account in respect of old ship

536.This section is based on section 33B of CAA 1990. It determines the amount of any balancing charge that is deemed to relate to the ship. It is one of the provisions that ensure that a shipowner may only defer a balancing charge arising from the disposal of a qualifying ship.

537.It is relatively easy to identify the balancing charge arising on the disposal of the ship if:

  • all of the expenditure on the provision of a ship is allocated to a single ship pool; and

  • no expenditure is then allocated from the single ship pool to the appropriate non-ship pool.

It is just the excess of the disposal value over the available qualifying expenditure after any allowances.  Subsection (2) provides this – “amount A”.

538.The same cannot be done if some or all of the expenditure on the ship is allocated to the appropriate non-ship pool. It is in the nature of pooling that it is impossible to say how much of any allowance relates to one bit of expenditure and how much to another. Some assumptions have to be made. Subsections (3) and (4) do this. They provide “amount B” – what would have been the balancing charge if:

  • all the expenditure on the ship were allocated to the appropriate pool;

  • no other expenditure had been allocated to that pool; and

  • writing-down allowances had been made in full.

539.Subsection (5) caters for a person who defers a balancing charge and then later makes an election to allocate expenditure to the non-ship pool. They can do this because section 129 allows up to two years to make the election. It substitutes amount B in place of amount A. Any adjustments to assessments can then be made if necessary (see section 157).

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