Capital Allowances Act 2001

115 Prohibited allowances: connected persons U.K.

(1) Section 114 applies with the modifications in subsection (2) in a case in which—

(a) an amount falls to be treated as a balancing charge under that section,

(b) the person on whom the balancing charge is to be imposed acquired the plant or machinery in question as a result of a transaction between connected persons (or a series of transactions each of which was between connected persons),

[F1 (c) 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 [F2 Chapter 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]

(d) a first-year allowance, a writing-down allowance or a balancing allowance in respect of expenditure on the provision of that plant or machinery has been made to any of those persons.

[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 purpose of calculating the balancing charge—

(a) A is the amount of any allowances within subsection (1)(d),

(b) any consideration paid or received on a disposal of the plant or machinery between the connected persons is to be disregarded, and

(c) if a balancing allowance or a balancing charge has been made in respect of any of the transactions, A is to be adjusted in a just and reasonable manner.

F4 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 S. 115(1)(c) 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. 487(2) (with Sch. 2 Pts. 1, 2)

F2 Words in s. 115(1)(c)(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. 336 (with Sch. 2)

F3 S. 115(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. 487(3) (with Sch. 2 Pts. 1, 2)

F4 S. 115(3) 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. 539(3), Sch. 3 (with Sch. 2)