Corporation Tax Act 2010 section 159

Use of relevant company's assets

Section 159 deals with when a person who provides funds to a company and then uses that company's capital-allowance-bearing assets in their own trade is treated as an equity holder in that company.

• Where a person provides consideration for shares or securities in a company, and assets of that company (on which capital allowances have been claimed) are used in a trade carried on by that person or a connected person, the person is treated as an equity holder in relation to those shares or securities.
• The relevant capital allowances include annual investment allowances, first-year allowances, and writing-down allowances on plant or machinery, as well as research and development allowances.
• Only the person who provided the consideration is treated as the equity holder — no other person acquires that status under this rule.
• Where the person is a bank and the consideration takes the form of a normal commercial loan, the equity holder treatment is limited to the portion of the loan equal to the cost of the assets concerned.