Capital Allowances Act 2001 section 104F

Special rate cars: discontinued activity continued by relevant company

Section 104F prevents a company that leases cars from claiming a full balancing allowance on its special rate pool when it discontinues its business, where a group company continues a similar car-leasing activity, by transferring the excess allowance as notional expenditure to that group company.

• Where a car-leasing company discontinues its trade and a group relief company continues a similar car-leasing activity within six months, the discontinuing company's special rate pool balancing allowance is restricted
• The balancing allowance on the special rate pool is reduced to the extent needed to offset balancing charges minus other balancing allowances (the "BC minus OBA" amount), with any negative result treated as nil
• The excess balancing allowance that is denied to the discontinuing company is instead transferred as notional special rate expenditure to the relevant group company, deemed incurred on the day after the discontinuing company's final chargeable period
• If the relevant company's acquisition period overlaps with the discontinuing company's penultimate chargeable period, the overlapping portion of the notional expenditure is deferred to a subsequent chargeable period