229ATransfer followed by hire-purchase etc: restrictions on hirer's allowances

1

This section applies where—

a

a person (“S”) transfers plant or machinery to another person (“B”),

b

at any time after the date of the transfer, the plant or machinery is available to be used by S, or a person (other than B) who is connected with S (“CS”),

c

it is available to be so used under a contract which provides that S or CS is to or may become the owner of the plant or machinery on the performance of the contract, and

d

S or CS incurs capital expenditure on the provision of the plant or machinery under that contract.

2

No annual investment allowance or first-year allowance is to be made in respect of the expenditure of S or CS under the contract.

3

The amount, if any, by which E exceeds D is to be left out of account in determining the available qualifying expenditure of S or CS.

4

E is the capital expenditure of S or CS on the provision of the plant or machinery under the contract referred to in subsection (1)(c).

5

If S is required to bring a disposal value into account under this Part because of the transfer referred to in subsection (1)(a), D is that disposal value.

6

Otherwise, D is whichever of the following is the smallest—

a

the market value of the plant or machinery;

b

if S incurred capital expenditure on the provision of the plant or machinery before the transfer referred to in subsection (1)(a), the amount of that expenditure;

c

if a person connected with S incurred capital expenditure on the provision of the plant or machinery before that transfer, the amount of that expenditure.

7

Sections 214 and 215 do not apply in relation to the contract referred to in subsection (1)(c).

8

Section 70Y(3) applies to references in this section to a transfer of plant or machinery by a person.

9

For the purposes of this section a transfer involving the grant of a lease takes place on the commencement of the term of the lease.