112 Excess allowances: connected personsU.K.
(1)Section 111 applies with the modifications in subsections (2) to (4) in a case in which—
(a)the owner acquired the plant or machinery as a result of a transaction between connected persons (or a series of transactions each of which was between connected persons),
[F1(b)the transaction was not effected (or, if more than one, none of the transactions was effected) on the occasion of a change in the persons carrying on the qualifying activity—
(i)which falls within [F2Chapter 1 of Part 22 of CTA 2010 (transfers of trade] without change of ownership), or
(ii)in relation to which Condition A or Condition B is met, and]
(c)any of the connected persons is a person to whom—
(i)a first-year allowance or a normal writing-down allowance has been made in respect of expenditure on the provision of the plant or machinery, or
(ii)a balancing allowance has been made in respect of such expenditure without a first-year allowance or normal writing-down allowance having been claimed.
[F3(1A)Condition A is that—
(a)at least one person who carried on the qualifying activity immediately before or immediately after the change was within the charge to income tax in respect of that activity, and
(b)at least one person who carried on the qualifying activity before the change continued to carry it on after the change.
(1B)Condition B is that—
(a)the qualifying activity was carried on in partnership both immediately before and immediately after the change,
(b)a company that was within the charge to corporation tax in respect of the activity carried it on immediately before or immediately after the change, and
(c)at least one company which carried the activity on before the change continued to carry it on after the change.]
(2)For the purposes of section 111(2) and (3)—
E is the amount of the expenditure in respect of which an allowance within subsection (1)(c) has been made,
F is the amount of any first-year allowance within subsection (1)(c), and
N is the amount of any normal writing-down allowance or balancing allowance within subsection (1)(c).
(3)For the purposes of section 111(2) and (3), any consideration paid or received on a disposal of the plant or machinery between the connected persons is to be disregarded.
(4)If a balancing allowance or a balancing charge has been made in respect of any of the transactions, the amount representing F + N is to be adjusted in a just and reasonable manner.
F4(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F1S. 112(1)(b) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 486(2) (with Sch. 2 Pts. 1, 2)
F2Words in s. 112(1)(b)(i) substituted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 335 (with Sch. 2)
F3S. 112(1A)(1B) inserted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 486(3) (with Sch. 2 Pts. 1, 2)
F4S. 112(5) repealed (with effect in accordance with s. 883(1) of the amending Act)by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 538(3), 3 (with Sch. 2)