OT21233 - Corporation Tax Ring Fence and Supplementary Charge

First-year Allowances for a Ring Fence Trade: Plant or Machinery: further rules

The 100% first-year allowances for a ring fence trade are contained within the general legislation in CAA 2001 for first-year allowances. The various rules that restrict the availability of allowances in certain circumstances apply equally here. In particular, this means first-year allowances cannot be claimed if

• the expenditure is incurred before 17 April 2002 by a company that has not yet started to trade on ring-fence plant and machinery, even if the trade commences on or after 17 April 2002. CAA01/s50 disapplies, for the purposes of first-year allowances, the general provision in CAA01/s12 that treats pre-commencement expenditure as incurred on the first day of trading (CA23110),
• the plant and machinery is transferred between connected companies - CAA01/s214 and CAA01/s217 (CA28300),
• there is a relevant transaction the sole or main benefit of which is the obtaining of plant and machinery allowance - CAA01/s215 (CA28300),
• there is a sale and lease-back of the plant or machinery – CAA01/s216 (CA28300),
• the asset is provided in connection with a change in the nature or conduct of a business carried on by someone else and the main benefit, or one of the main benefits, that could reasonable expected from the change is obtaining a first-year allowance – CAA01/s46(2) general exclusion 7 (CA23110).