Capital Allowances Act 2001 section 114

Prohibited allowances: standard recovery mechanism

Section 114 deals with how previously claimed allowances on plant or machinery are recovered when an event occurs during the designated period that causes the expenditure to fall within the prohibition on allowances under section 110.

• Where allowances have already been claimed but the expenditure later becomes prohibited under section 110, HMRC recovers those allowances from the person who owned the plant or machinery immediately before the triggering event.
• Recovery is achieved through a balancing charge equal to the total allowances previously given, less any amounts already recovered under the excess allowances rules in sections 111 or 112.
• A disposal value must also be brought into account, calculated as the original expenditure minus the net allowances being clawed back, which removes the remaining qualifying expenditure from the capital allowances pool.
• When calculating the total allowances previously given on an item of plant or machinery, the item is treated as if it were the only asset in the pool, ensuring an accurate figure is identified.