Capital Allowances Act 1990 (repealed)

77 Successions to trades: connected persons. U.K.

(1) Where a person (in this subsection referred to as “the successor”) has succeeded to a trade which was until that time carried on by another person (in this subsection referred to as “the predecessor”) and the two persons are connected with each other within the terms of section 839 of the principal Act and the successor is not a dual resident investing company, those persons may by notice to the inspector elect that the provisions of this subsection shall have effect; and in that event—

(a) for the purpose of making allowances and charges under this Part, the trade shall not be treated as discontinued;

(b) allowances and charges shall be so made to or on the successor as if everything done to or by the predecessor had been done to or by the successor, but with no account being taken of the sale or transfer from the predecessor to the successor of any machinery or plant which was in use for the purposes of the trade at the time of the succession.

(2) Subsection (1) above shall not apply in relation to successions occurring after the passing of the M1 Finance Act 1988 (29th July 1988); and the requirement in that subsection that the successor must not be a dual resident investing company shall not apply if the successor began to carry on the trade before 1st April 1987.

(3) Where at any time after the passing of the Finance Act 1988 a person (referred to below as “the successor”) succeeds to a trade which was until that time carried on by another person (referred to below as “the predecessor”) and—

(a) the two persons are connected with each other;

(b) each of them is within the charge to tax in the United Kingdom on the profits of the trade; and

(c) the successor is not a dual resident investing company,

those persons may by notice given to the inspector not later than two years after that time, elect that the provisions of subsection (4) below shall have effect.

(4) In the event of an election under subsection (3) above—

(a) for the purpose of making allowances and charges under this Part, any machinery or plant which—

(i) immediately before the time when the succession took place, belonged to the predecessor and was in use for the purposes of the trade; and

(ii) immediately after that time, belonged to the successor and was in use for those purposes,

shall (notwithstanding any actual sale or transfer) be treated as sold by the predecessor to the successor at a price which does not give rise to a balancing allowance or balancing charge; and

(b) allowances and charges shall be made under this Part to or on the successor as if everything done to or by the predecessor had been done to or by the successor.

(5) For the purposes of subsection (3) above the predecessor and the successor are connected with each other if—

(a) they are connected with each other within the terms of section 839 of the principal Act;

(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 some other person has the right to a share in both of them; or

(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) some other person has control over both of them.

(6) In subsection (5) above “control” shall be construed in accordance with section 840 of the principal Act; and any reference to the right to a share in a partnership is a reference to the right to a share of the assets or income of that partnership.

(7) All such assessments and adjustments of assessments shall be made as are necessary to give effect to subsections (3) and (4) above.

(8) Sections [F1 38G,] 41(5) and 78(1) shall not apply in any case where an election is made under subsection (3) above.

This subsection shall not apply in relation to successions occurring before 27th July 1989.

Textual Amendments

F1 Word in s. 77(8) inserted (with application in accordance with Sch. 14 para. 10 of the amending Act) by Finance Act 1997 (c. 16), Sch. 14 para. 9

Modifications etc. (not altering text)

C1 S. 77(3) modified (for the year of assessment 1988-1989) by S.I. 1991/851, regs. 1, 9, Sch.2.

C2 S. 77(3) modified (for the year of assessment 1989-1990) by S.I. 1992/511, regs. 1, 9, Sch.2.

C3 S. 77(3) applied (with modifications) (for the year of assessment 1990–91) by The Lloyd’s Underwriters (Tax) (1990–91) Regulations 1993 (S.I. 1993/415), reg. 9, Sch.2

C4 S. 77(3) modified (for the year of assessment 1991-92) by The Lloyds Underwriters (Tax) (1991-92) Regulations 1994 (S.I. 1994/728), regs. 1(1), 9, Sch. 2

C5 S. 77(3) modified (for the years of assessment 1992-93 and 1993-94) by The Lloyds Underwriters (Tax) (1992–93 to 1996–97) Regulations 1995 (S.I. 1995/352), regs. 1(1), 14(1), Sch.

C6 S. 77(3) modified (for the year of assessment 1994-95) by The Lloyds Underwriters (Tax) (1992–93 to 1996–97) Regulations 1995 (S.I. 1995/352), regs. 1(1), 15(1), Sch.

Marginal Citations

M1 1988 c. 39.