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Capital Allowances Act 2001

Section 243: Restriction on B’s qualifying expenditure: sale and finance leaseback

868.This section is based on parts of sections 75, 76 and 76A of CAA 1990. It extends the rules in section 224 to deal with cases that would fall within that section if the expenditure also involves a VAT element. It ensures that the VAT expenditure is taken into account in restricting the allowances.

869.Subsection (1) applies the provisions of this section in place of those in section 224 when VAT is involved.

870.Subsection (2) sets the limit to the available qualifying expenditure by reference to the amounts D and E.

871.Subsection (3) defines “E” to include the additional VAT. This is subject to the rule for the case in subsection (7).

872.Subsection (4) defines “D” if the seller is required to bring a disposal value into account. In that case D is the amount given by applying the rules in section 222.

873.Subsection (5) defines “D” if the seller is not required to bring a disposal value into account. That may be because the seller is not within the UK tax net. In these circumstances D is the smallest of the three amounts specified.

874.Subsection (6) imports the meaning of “notional written-down value” (mentioned in subsection (5)) given by section 222(3).

875.Subsection (7) defines “E” if D is determined under subsection (5) as market value which is inclusive of VAT: E includes that VAT.

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