INTM215250 - Controlled Foreign Companies: before CTSA

Notice of declaration: capital allowances - prevention of double relief

ICTA88/SCH24/PARA10

See the guidance at INTM209140. The same market value rule for plant and machinery applies for periods prior to the introduction of self-assessment for companies

ICTA88/SCH24/PARA11

Sometimes the market value rule for plant and machinery works in a particular way. The result is that relief against chargeable profits could be given more than once for the same expenditure.

The purpose of ICTA88/SCH24/PARA11 is to stop the possibility of such double relief. The Board can use it to make a declaration for an accounting period that is a period earlier than the 'starting period' - the first period for which the Board in fact gives a direction. The Board may make such a declaration if it considers that it gave no direction for the earlier period for the following reason – because it is assumed that capital allowances on plant and machinery or industrial buildings were allowed. The result of this assumption is that a company

• is not subject to a lower level of taxation - see INTM202030 or
• has no chargeable profits or
• has chargeable profits below the de minimis amount - see INTM207000.

The Board however cannot make such a declaration if, for example, the company would have passed the motive test, the acceptable distribution test, the exempt activities test or the public quotation test.