Capital Allowances Act 2001 section 313A

Calculation of allowance after sale of relevant interest: anti-avoidance

Section 313A restricts the writing-down allowance available to a buyer of an industrial building where a connected-party sale has been structured to gain a tax advantage by exploiting differences in accounting periods.

• The section targets sales of the relevant interest in a building between connected parties (the "control test") where the buyer and seller have different chargeable periods
• It only applies where a main purpose of the sale is for the buyer to obtain a tax advantage under the industrial buildings allowance rules
• The buyer's writing-down allowance for the chargeable period of the sale is reduced on a time-apportioned basis, calculated as the number of days of ownership divided by the total days in the chargeable period, multiplied by the full allowance
• Without this provision, a buyer could potentially claim a full year's writing-down allowance despite only holding the relevant interest for part of the chargeable period