Part 2 Plant and machinery allowances

F1Chapter 10ASpecial rate expenditure

Rules applying to special rate expenditure

104EDisposal value of special rate assets

(1)

This section applies if—

(a)

section 104D (writing-down allowances at F2F36% or 10%) has had effect in relation to any special rate expenditure incurred by a person (“the taxpayer”),

(b)

any disposal event occurs in relation to the item on which the expenditure was incurred,

(c)

the disposal value to be brought into account by the taxpayer would (but for this section) be less than the notional written-down value of the item, and

(d)

the disposal event is part of, or occurs as a result of, a scheme or arrangement the main purpose or one of the main purposes of which is the obtaining by the taxpayer of a tax advantage under this Part.

(2)

The disposal value that the taxpayer must bring into account is the notional written-down value of the item.

(3)

The notional written-down value is—

QE-A

where—

QE is the taxpayer's expenditure on the item that is qualifying expenditure, and

A is the total of all allowances which could have been made to the taxpayer in respect of that expenditure if—

  1. (a)

    that expenditure had been the only expenditure that had ever been taken into account in determining the taxpayer's available qualifying expenditure,

  2. (b)

    where the item is a long-life asset, that expenditure had not been prevented by the application of a monetary limit from being long-life asset expenditure, and

  3. (c)

    all allowances had been made in full.