TTM10450 - Ship Leasing: Quantitative restrictions on allowances

Disposals

There are special rules to deal with the treatment of disposal proceeds received by a lessor in cases where the allowances available in respect of the cost of a ship were subject to the quantitative restrictions described in TTM10400.

Any disposal proceeds of such a ship should be deducted from the lessor’s 25% and 10% pools in the same proportion as the cost of providing that ship was taken to those pools.

Because the expenditure in the 25% pool is written off faster than the expenditure in the 10% pool, it could be that the disposal proceeds taken to the 25% pool exceed the expenditure remaining in it, whilst there is still unrelieved expenditure remaining in the 10% pool.

Any excess of disposal proceeds from the 25% pool does not immediately give rise to a balancing charge. That excess is instead first deducted from the 10% pool.

A balancing charge only arises if the amount(s) taken to the 10% pool (directly or indirectly) exceed the unrelieved expenditure remaining in it.

Example

An example of how to treat disposal proceeds is at TTM10460.

References