Part 2

Plant and machinery allowances
Chapter 11

Overseas leasing

Recovery of excess allowances

Excess allowances: connected persons
112
1
Section 111 applies with the modifications in subsections (2) to (4) in a case in which—
a
the owner acquired the plant or machinery as a result of a transaction between connected persons (or a series of transactions each of which was between connected persons),
b
none of the relevant provisions of ICTA under which the qualifying activity might have been treated as continuing has applied in respect of the transaction (or transactions), and
c
any of the connected persons is a person to whom—
i
a first-year allowance or a normal writing-down allowance has been made in respect of expenditure on the provision of the plant or machinery, or
ii
a balancing allowance has been made in respect of such expenditure without a first-year allowance or normal writing-down allowance having been claimed.
2
For the purposes of section 111(2) and (3)—
- E is the amount of the expenditure in respect of which an allowance within subsection (1)(c) has been made,
- F is the amount of any first-year allowance within subsection (1)(c), and
- N is the amount of any normal writing-down allowance or balancing allowance within subsection (1)(c).
3
For the purposes of section 111(2) and (3), any consideration paid or received on a disposal of the plant or machinery between the connected persons is to be disregarded.
4
If a balancing allowance or a balancing charge has been made in respect of any of the transactions, the amount representing F + N is to be adjusted in a just and reasonable manner.
5
“The relevant provisions of ICTA” means section 113(2), 114(1) or 343(2) (effect of change in persons carrying on a trade etc. or of company reconstruction).