Capital Allowances Act 2001 section 212P

Effect of excess of allowances on pools

Section 212P deals with what happens to capital allowance pools when there is an excess of allowances following a qualifying change that triggers the anti-avoidance rules on allowance buying.

• The unrelieved qualifying expenditure in each relevant pool is reduced at the start of the new period by the amount of the excess of allowances, and that excess is placed into a new, separate pool of the same type
• Where company C takes over a qualifying activity (or part of one) following the qualifying change, its carrying on of that activity is treated as a separate trade or business for the purpose of claiming allowances from the new pool
• Losses arising from allowances claimed against the new pool cannot be set off against total profits or surrendered as group relief, except against profits of a qualifying activity already carried on by C or a member of partnership P at the start of the relevant day, and only up to the amount that would have been available without the qualifying change
• Where condition C in section 212C applies, the pool reduction and creation of the new pool take effect at the time of the qualifying change itself, rather than at the beginning of the new period