B3.359 Plant and machinery allowances—assets provided or used only partly for qualifying activity
Notwithstanding the general requirement that expenditure on plant or machinery or plant only qualifies for capital allowances if it is incurred wholly and exclusively for the purposes of a qualifying activity, there are further provisions which allow restricted allowances where the plant or machinery is used partly for the purposes of the qualifying activity and partly for other purposes1.
The full allowances are reduced to such extent as may be just and reasonable having regard to all the relevant circumstances2. Where such a reduction is made, any additional VAT liability or rebate under the VAT capital goods scheme in respect of the asset concerned has to be reduced in the same proportion3.
Meaning of just and reasonable
The meaning of the phrase 'just and reasonable' was considered in two cases in which capital allowances were claimed for cars used partly for the purposes of the business. In Kempster4, a dairy farmer bought, during the year to 31 March 1949, a new Alvis car for £1,284, the list price. He already owned a 1933 Vauxhall car for use on farm business, and this car was fitted with a draw-bar for drawing a trailer. The Alvis was used only on roads, and was not fitted with a draw-bar. At the material time, the cost of a medium second-hand car 12 months old would have been in the neighbourhood of £1,300. It was agreed that the Alvis was in use for farm
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