Part 2Plant and machinery allowances

Chapter 5Allowances and charges

Disposal events and disposal values: general

61Disposal events and disposal values

(1)

A person who has incurred qualifying expenditure is required to bring the disposal value of the plant or machinery into account for the chargeable period in which—

(a)

the person ceases to own the plant or machinery;

(b)

the person loses possession of the plant or machinery in circumstances where it is reasonable to assume that the loss is permanent;

(c)

the plant or machinery has been in use for mineral exploration and access and the person abandons it at the site where it was in use for that purpose;

(d)

the plant or machinery ceases to exist as such (as a result of destruction, dismantling or otherwise);

(e)

the plant or machinery begins to be used wholly or partly for purposes other than those of the qualifying activity;

(f)

the qualifying activity is permanently discontinued.

(2)

The disposal value to be brought into account depends on the disposal event, as shown in the Table—

TableDisposal values: general

1. Disposal event

2. Disposal value

1. Sale of the plant or machinery, except in a case where item 2 applies.

The net proceeds of the sale, together with—

  1. (a)

    any insurance money received in respect of the plant or machinery as a result of an event affecting the price obtainable on the sale, and

  2. (b)

    any other compensation of any description so received, so far as it consists of capital sums.

2. Sale of the plant or machinery where—

  1. (a)

    the sale is at less than market value,

  2. (b)

    there is no charge to tax under Schedule E, and

  3. (c)

    the condition in subsection (4) is met by the buyer.

The market value of the plant or machinery at the time of the sale.

3. Demolition or destruction of the plant or machinery.

The net amount received for the remains of the plant or machinery, together with—

  1. (a)

    any insurance money received in respect of the demolition or destruction, and

  2. (b)

    any other compensation of any description so received, so far as it consists of capital sums.

4. Permanent loss of the plant or machinery otherwise than as a result of its demolition or destruction.

Any insurance money received in respect of the loss and, so far as it consists of capital sums, any other compensation of any description so received.

5. Abandonment of the plant or machinery which has been in use for mineral exploration and access at the site where it was in use for that purpose.

Any insurance money received in respect of the abandonment and, so far as it consists of capital sums, any other compensation of any description so received.

6. Permanent discontinuance of the qualifying activity followed by the occurrence of an event within any of items 1 to 5.

The disposal value for the item in question.

7. Any event not falling within any of items 1 to 6.

The market value of the plant or machinery at the time of the event.

(3)

The amounts referred to in column 2 of the Table are those received by the person required to bring the disposal value into account.

(4)

The condition referred to in item 2 of the Table is met by the buyer if—

(a)

the buyer’s expenditure on the acquisition of the plant or machinery cannot be qualifying expenditure under this Part or Part 6 (research and development allowances), or

(b)

the buyer is a dual resident investing company which is connected with the seller.

(5)

In this section “mineral exploration and access” has the same meaning as in Chapter 13 (provisions affecting the mining and oil industries) and Part 5 (mineral extraction allowances).