Part 2

Plant and machinery allowances
Chapter 20

Supplementary provisions

Partnerships and successions

Election where predecessor and successor are connected persons
266
1
This section applies if a person (“the successor”) succeeds to a qualifying activity which was until that time carried on by another person (“the predecessor”) and—
a
the two persons are connected with each other,
b
each of them is within the charge to tax on the profits of the qualifying activity, and
c
the successor is not a dual resident investing company.
2
If this section applies, the predecessor and the successor may jointly elect for the provisions of section 267 to have effect.
3
The election may be made whether or not any plant or machinery has actually been sold or transferred.
4
The election must be made by notice to the an officer of Revenue and Customs within 2 years after the date on which the succession takes effect.
5
For the purposes of this section, the predecessor and the successor are connected with each other if any of the following conditions is met—
a
they would be treated as connected persons under section 575;
b
one of them is a partnership and the other has the right to a share in that partnership;
c
one of them is a body corporate and the other has control over that body;
d
both of them are partnerships and another person has the right to a share in both of them;
e
both of them are bodies corporate, or one of them is a partnership and the other is a body corporate, and (in either case) another person has control over both of them.
6
In subsection (5) any reference to a right to a share in a partnership is to be read as a reference to a right to a share of the assets or income of the partnership.
7
Sections 104E, 108 and 265 (disposal value in connection with special rate expenditure, effect of disposal to connected person on overseas leasing pool and general provisions about successions) do not apply if an election is made under this section (but see section 267A).
8
This section does not apply if section 561 applies (transfer or division of UK business).
Pt. 2 modified (24.2.2003) by Proceeds of Crime Act 2002 (c. 29), s. 458(1), Sch. 10 para. 12 (with Sch. 10 para. 17(1)); S.I. 2003/120, art. 2, Sch. (with arts. 3 4) (as amended (20.2.2003) by S.I. 2003/333, art. 14)
S. 45H(2) modified (with effect in accordance with s. 167 of the amending Act) by Finance Act 2003 (c. 14) , Sch. 30 para. 7
Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 4 para. 4 ; S.I. 2004/2575 , art. 2(1) , Sch. 1
Pt. 2 modified (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 paras. 9(2), 21(2) (with s. 38(2)); S.I. 2004/2575, art. 2(1) , Sch. 1
Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 paras. 10, 22 (with s. 38(2) ); S.I. 2004/2575 , art. 2(1) , Sch. 1
Words in Act substituted (18.4.2005) by Commissioners for Revenue and Customs Act 2005 (c. 11), s. 53(1), Sch. 4 para. 83(1); S.I. 2005/1126, art. 2(2)(h)
Words in s. 266(7) inserted (with effect in accordance with s. 85(5) of the amending Act) by Finance Act 2006 (c. 25), s. 85(2)
Words in s. 266(5)(a) substituted (6.4.2007) by Income Tax Act 2007 (c. 3), s. 1034(1), Sch. 1 para. 405 (with Sch. 2)
Word in s. 266(7) substituted (with effect in accordance with Sch. 26 para. 14 of the amending Act) by Finance Act 2008 (c. 9), Sch. 26 para. 12(a)
Words in s. 266(7) substituted (with effect in accordance with Sch. 26 para. 14 of the amending Act) by Finance Act 2008 (c. 9), Sch. 26 para. 12(b)
Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 19
Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 35
Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 paras. 36, 37
Pt. 2 modified (21.7.2009) by Finance Act 2009 (c. 10), s. 24
Pt. 2 modified (17.7.2013) by Finance Act 2013 (c. 29), s. 73(7)-(11) (with s. 73(6))
Words in s. 266(8) substituted (31.12.2020) by The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 10(3) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)
Pt. 2 modified (10.6.2021) by Finance Act 2021 (c. 26), s. 9(1)(a)