10 |
A separate rule applies to the transfer of a UK trade carried on by a company resident in another EC member state.58 The transfer is treated as giving rise to neither allowances nor charges, provided the transferee is within the charge to UK tax.59 |
Plant and Machinery have their own more complex regime.60 Know how has its own provision.61 |
24A.1.7.2 Apportionment of Proceeds |
Special rules apply when the sale both involves an asset in respect of which allowances have been claimed and another asset.62 The net proceeds of sale are apportioned and the Commissioners who are not bound by any apportionment made by the parties.63 |
24A.1.7.3 Discontinuance and Deferrals: Succession to Trades |
In general, where a person carrying on an activity which qualifies for capital allowances eg a trader (T1) discontinues a trade, a balancing charge or allowance is made. Any capital allowances still unused cannot be carried forward if one trade ends and another one begins.64 If the trade is transferred to another person (T2), T2 may be able to claim allowances in respect of its own capital expenditure including that in respect of items bought from T1; that expenditure may give rise to balancing charges or allowances to T1. |
Again, Plant and Machinery have their own rules.65 The rules do not apply to hotels or assured tenancies. |
A similar deferral election on the transfer of a UK trade is made where one party is resident in one member state of the EC and the other in another member state, provided the transferee is within the charge to UK tax.66 |
Market value is also used on successions to partnerships where a deemed discontinuance arises s under TA 1988, ss 113. A similar rule applies to companies ceasing to trade under section 337 (1).67 The new traders are entitled to allowances as if they had acquired the assets at market price,68 although they are not entitled to initial, as opposed to writing down and first year allowances. Curiously, perhaps, these rules do not apply to research and development allowances.69 |