CA26474 | PMA: Fixtures: Changes in ownership: Past owner

CAA01/S187A(2) and FA12/SCH10/PARA13

As a general rule, ‘the past owner’ is the last person who was entitled to claim capital allowances by virtue of incurring qualifying expenditure on the provision of the fixture. A person who was treated as the owner by the contributions legislation in CAA01/S538 CA14500 is not treated as the past owner.

Furthermore, as a consequence of the transitional rules in FA12/SCH10/PARA13, a past owner does not include a person who ceased to be treated as owning the plant or machinery before 1 April 2012 (corporation tax) or 6 April 2012 (income tax).

Example

Jill purchased a freehold building in July 2008 for the purpose of her trade. She claimed plant and machinery allowances on £100,000 which was the part of the cost of the building that related to the fixed plant and machinery.

Jill sold the freehold interest in the building in January 2012 to a charity. She brought in a disposal value of £95,000 in respect of the fixed plant and machinery having ascertained that this amount represented the part of the sale value that related to those fixtures.

The charity used the property for the purpose of generating charitable profits which were tax exempt under CTA10/S478 and CTA10/S485. Therefore, the charity was not able to claim capital allowances.

The charity sold the freehold interest in the building to Jack in February 2013.

In this case the new rules do not apply because when the building was sold to Jack it had not been owned by a person who was entitled to claim capital allowances at any time from the commencement of the new rules. The transitional rules in paragraph 13 of Schedule 10 FA 2012 mean that Jill is not treated as the “past owner” for the purpose of section 187A and so section 187A does not apply.

However CAA01/S185 applies to restrict Jack’s qualifying expenditure on the fixtures in the building to Jill’s disposal value of £95,000 CA26400.

CAA01/S187B(3)

The current owner and the past owner may be the same person.