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Capital Allowances Act 2001

Section 147: Exclusions: ship previously owned

563.This is the first of four sections with further conditions for expenditure to qualify for attribution. It is based on section 33D(4) and (5) of CAA 1990. It stops expenditure qualifying for attribution if, broadly speaking, a person, A, buys a ship:

  • within six years of previously owning it; or

  • which had been owned in that six-year period by a person who is connected with A at any time between:

    • the disposal event; and

    • A becoming the owner of the ship.

564.“Connected person” is defined in section 187.

  • Example

  • A plc defers a balancing charge arising on the disposal of a ship on 6 February 2003. On 23 April 2005 A plc purchases a qualifying ship, S. S was owned by A plc’s subsidiary company, E Limited between 15 May 2001 and 6 June 2002. At all other times, S was owned by unconnected third parties.

  • Subsection (1)(a) does not prevent A plc from attributing the deferred balancing charge to the expenditure on S because the company has not previously owned the ship.

  • Subsection (1)(b), however, determines that the deferred amount may not be attributed to the expenditure on S. This applies because E Limited has owned the ship during the six years before S plc acquired the ship (on 23 April 2005) and A plc is connected with E Limited at a material time (in other words at some time between 6 February 2003 and 23 April 2005).

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