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Capital Allowances Act 2001

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This is the original version (as it was originally enacted).

Restrictions on amount of qualifying expenditure

185Fixture on which a plant and machinery allowance has been claimed

(1)This section applies if—

(a)a person (“the current owner”) is treated as the owner of a fixture as a result of incurring capital expenditure (“new expenditure”) on its provision,

(b)the plant or machinery is treated as having been owned at a relevant earlier time by any person (“the past owner”) as a result of incurring other expenditure,

(c)the plant or machinery is within paragraph (b) otherwise than as a result of section 538 (contribution allowances for plant and machinery), and

(d)the past owner is or has been required to bring the disposal value of the plant or machinery into account (as a result of having made a claim in respect of that other expenditure).

(2)If the new expenditure exceeds the maximum allowable amount, the excess—

(a)is to be left out of account in determining the current owner’s qualifying expenditure, or

(b)if the new expenditure has already been taken into account for this purpose, is to be treated as expenditure that should never have been taken into account.

(3)The maximum allowable amount is—

D + I

where—

  • D is the disposal value of the plant or machinery which the past owner has been or is required to bring into account, and

  • I is any of the new expenditure that is treated under section 25 (building alterations in connection with installation) as expenditure on the provision of the plant or machinery.

(4)If more than one disposal event has occurred requiring the past owner to bring the disposal value of the plant or machinery into account, the maximum allowable amount is calculated by reference only to the most recent of those events.

(5)For the purposes of this section, the current owner and the past owner may be the same person.

(6)In subsection (1)(b) “relevant earlier time” means (subject to subsection (7)) any time before the earliest time when the current owner is treated as owning the plant or machinery as a result of incurring the new expenditure.

(7)If, before the earliest time when the current owner is treated as owning the plant or machinery as a result of incurring the new expenditure—

(a)any person has ceased to own the plant or machinery as a result of a sale,

(b)the sale was not a sale of the plant or machinery as a fixture, and

(c)the buyer and seller were not connected persons at the time of the sale,

the relevant earlier time does not include any time before the seller ceased to own the plant or machinery.

186Fixture on which an industrial buildings allowance has been made

(1)This section applies if—

(a)a person (“the past owner”) has at any time claimed an allowance to which he is entitled under Part 3 (industrial buildings allowances) in respect of expenditure which was or included expenditure on the provision of plant or machinery,

(b)the past owner has transferred the interest which is the relevant interest for the purposes of Part 3, and

(c)the current owner of the plant or machinery makes a claim in respect of expenditure (“new expenditure”) incurred—

(i)on the provision of the plant or machinery, and

(ii)at a time when it is a fixture in the building.

(2)If the new expenditure exceeds the maximum allowable amount, the excess is to be left out of account in determining the current owner’s qualifying expenditure.

(3)The maximum allowable amount is—

Formula - (F divided by T) multiplied by R

where—

  • F is the part of the consideration for the transfer by the past owner that is attributable to the fixture,

  • T is the total consideration for that transfer, and

  • R is the residue of qualifying expenditure attributable to the relevant interest immediately after that transfer, calculated on the assumption that the transfer was a sale of the relevant interest.

(4)For the purposes of this section the current owner of the plant or machinery is—

(a)the person to whom the past owner transferred the relevant interest, or

(b)any person who is subsequently treated as the owner of the plant or machinery.

(5)In this section “building” and “residue of qualifying expenditure” have the same meaning as in Part 3.

187Fixture on which a research and development allowance has been made

(1)This section applies if—

(a)a person has at any time claimed an allowance to which he is entitled under Part 6 (research and development allowances) in respect of qualifying expenditure under that Part (“Part 6 expenditure”),

(b)an asset representing the whole or part of the Part 6 expenditure (“the Part 6 asset”) has ceased to be owned by that person (“the past owner”),

(c)the Part 6 asset was or included plant or machinery, and

(d)the current owner makes a claim under this Part in respect of expenditure (“new expenditure”) incurred—

(i)on the provision of the plant or machinery, and

(ii)at a time when it is a fixture.

(2)If the new expenditure exceeds the maximum allowable amount, the excess is to be left out of account in determining the current owner’s qualifying expenditure.

(3)The maximum allowable amount is—

Formula - (F divided by T) multiplied by A

where—

  • F is the part of the consideration for the disposal of the Part 6 asset by the past owner that is attributable to the fixture,

  • T is the total consideration for that disposal, and

  • A is an amount equal to whichever is the smaller of—

    (a)

    the disposal value of the Part 6 asset when the past owner ceased to own it, and

    (b)

    so much of the Part 6 expenditure as related to the provision of the Part 6 asset.

(4)For the purposes of this section the current owner of the plant or machinery is—

(a)the person who acquired the Part 6 asset from the past owner, or

(b)any person who is subsequently treated as the owner of the plant or machinery.

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