Capital Allowances Act 2001 section 45G

Plant or machinery used for less than five years in a ring fence trade

Section 45G provides a clawback mechanism that withdraws first-year allowance treatment where plant or machinery claimed under the ring fence trade provisions is not used exclusively in a ring fence trade for at least five years.

• First-year allowances claimed under the ring fence trade rules are clawed back if the plant or machinery is not used in a ring fence trade, or is used for non-ring-fence purposes, during the relevant period
• The relevant period runs from when the expenditure was incurred until either the fifth anniversary of the expenditure or the day before the asset leaves the ownership of the company (or a connected company), whichever is earlier
• HMRC will make all necessary assessments and adjustments to recover the allowances, and the taxpayer must notify HMRC if a return becomes incorrect as a result of this clawback
• The taxpayer must give notice to HMRC within three months of becoming aware that a return has become incorrect because of the operation of this clawback provision