Commentary

B3.358 Plant and machinery allowances on fixtures—anti-avoidance and no double allowances

Business tax
Business tax | Commentary

B3.358 Plant and machinery allowances on fixtures—anti-avoidance and no double allowances

Business tax | Commentary

B3.358 Plant and machinery allowances on fixtures—anti-avoidance and no double allowances

Disposal values in avoidance cases

A special rule applies where an event which gives rise to the inclusion of a disposal value of a fixture is part of a scheme or arrangement which has avoidance of tax as its main object or one of its main objects1. Avoidance is defined as obtaining an allowance or increased allowance or deduction or as avoiding or reducing a balancing charge2.

In such a case, the disposal value to be brought into account by the vendor or lessor is not to be less than the notional written-down value of the fixture at the time of the relevant event3.

For this purpose, the notional written-down value of an asset on a disposal or assignment is calculated by treating it as having been the only asset on which capital allowances have been claimed and that the full amount of all available capital allowances had been given (this includes writing-down allowances at the special rate); the notional written-down value is:

where:

  1.  

         QE is the taxpayer's expenditure on the plant or machinery that is qualifying expenditure;

  2.  

         A is the total of

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