Capital Allowances Act 2001 section 317

Balancing event where hotel not qualifying hotel for 2 years

Section 317 creates an automatic balancing event when a building that was a qualifying hotel loses that status and remains a non-qualifying hotel for a continuous period of two years.

• If a building ceases to be a qualifying hotel and two years pass without it regaining that status or any other balancing event occurring, a deemed sale is triggered automatically.
• The deemed sale is treated as taking place at the end of the two-year period, with proceeds equal to the market value of the relevant interest in the building at that time.
• The temporary disuse rule still applies during that two-year window, meaning the building can be treated as a qualifying hotel for up to two years after it falls temporarily out of use — but not beyond that point.
• This section does not apply where the expenditure in question is qualifying enterprise zone expenditure.