A partnership change that is not treated as a permanent discontinuance by ICTA88/S113 (1) or ICTA88/S337 (1) is not treated as a cessation for capital allowance purposes apart from PMA, RDA and ATA. Capital allowances are calculated as if the new partnership had been carrying on the business from the start and had done everything that the original partnership had done.
Example Chris and Ivor are in partnership. They build a recording studio for £750,000 on land that the partnership owns and claim IBAs. Three years later Geoff joins the partnership. This change is not treated as a permanent cessation of the business. The enlarged partnership continues to claim IBAs and four years later they sell the recording studio for £740,000 excluding the land. The balancing charge is calculated as if:
