Capital Allowances Act 2001 section 115

Prohibited allowances: connected persons

Section 115 modifies the standard recovery mechanism for prohibited allowances where plant or machinery has been acquired through transactions between connected persons.

• Where plant or machinery is acquired between connected persons and allowances have previously been claimed, the balancing charge calculation is modified to capture all allowances given across the connected group
• Any consideration paid or received on disposals between the connected persons is ignored when calculating the balancing charge
• The modifications do not apply if the transaction took place on a change of persons carrying on the trade that qualifies for "succession" treatment (broadly, transfers of trade without change of ownership, or certain partnership changes meeting Condition A or Condition B)
• If a balancing allowance or balancing charge has already arisen on any of the connected-person transactions, the total allowances figure is adjusted on a just and reasonable basis