Capital Allowances Act 2001

243 Restriction on B’s qualifying expenditure: sale and finance leaseback

(1) This section applies instead of section 224 (restriction on B’s qualifying expenditure in case of sale and finance leaseback) if—

(a) apart from this subsection, section 224 would apply, and

(b) an additional VAT liability has been incurred by B.

(2) The amount, if any, by which E exceeds D is to be left out of account in determining B’s available qualifying expenditure.

E and D are defined in subsections (3) to (7).

(3) Except where subsection (7) applies, E is the sum of—

(a) B’s expenditure under the relevant transaction, and

(b) any additional VAT liability incurred by B in respect of that expenditure.

(4) If S is required to bring a disposal value into account under this Part because of the relevant transaction, D is that disposal value (determined in accordance with section 222).

(5) If S is not required to bring a disposal value into account under this Part because of the relevant transaction, 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, the notional written-down value of that capital expenditure;

(c) if a person connected with S incurred capital expenditure on the provision of the plant or machinery, the notional written-down value of that capital expenditure.

(6) In this section “the notional written-down value”, in relation to expenditure incurred by a person on the provision of plant or machinery, has the meaning given by section 222(3).

(7) If—

(a) S is not required to bring a disposal value into account under this Part because of the relevant transaction,

(b) the smallest amount under subsection (5) is the market value of the plant or machinery, and

(c) that value is determined inclusive of value added tax,

E is the amount of B’s expenditure under the relevant transaction.