Part 2

Plant and machinery allowances
Chapter 9

Short-life assets

Disposal to connected person
89
1
This section applies if, at any time before the four-year cut-off, a person (“the transferor”) disposes of a short-life asset to a connected person.
2
Subject to subsection (6)—
a
the transferor is to be treated as having sold the short-life asset to the connected person for an amount equal to the available qualifying expenditure in the short-life asset pool for the chargeable period in which the disposal occurs, and
b
the connected person is to be treated as having incurred qualifying expenditure of the same amount in buying the short-life asset.
3
Subject to subsection (6)—
a
sections 217 and 218 (restrictions on first-year and other allowances in the case of certain transactions between connected persons, to obtain a tax advantage etc.), and
b
sections 222 to 225 (further restrictions in the case of sale and finance leaseback),
do not apply to the disposal.
4
Immediately after the disposal of the short-life asset, the connected person is to be taken to have made an election under section 83 (so that the plant or machinery is a short-life asset in his hands).
5
In relation to the connected person, “the four-year cut-off” means the date that would have been the four-year cut-off in relation to the transferor.
6
Subsections (2) and (3) apply in relation to a disposal only if—
a
the transferor, and
b
the connected person,
elect that they should apply.
7
An election under subsection (6) must be made by notice given to the Inland Revenue no later than 2 years after the end of the chargeable period in which the disposal occurred.