Capital Allowances Act 2001 section 197

Disposal values in avoidance cases

Section 197 prevents taxpayers from gaining a tax advantage by artificially reducing the disposal value of plant or machinery through avoidance schemes, by substituting a higher "notional written-down value" instead.

• Where a disposal event is part of a scheme aimed at obtaining a tax advantage, the normal disposal value is overridden
• The substituted disposal value is the "notional written-down value", which is the qualifying expenditure minus all allowances that could have been claimed
• The rule only applies where the normal disposal value would be less than the notional written-down value, meaning it can only increase the disposal value
• The notional written-down value is calculated as if the expenditure in question were the only expenditure ever allocated to the pool, with all available allowances claimed in full