SolvedTTM10460 | Ship Leasing: Quantitative restrictions on allowances
From HM Revenue & Customs · Tonnage Tax Manual
Disposals: Example
The following example was when the written down allowance for the Special Pool rate was 8%. The current rate is 6%.
A large ro-ro ship (a long life asset for CA purposes) is acquired for £100m on 1 January 2012 by cross-Channel operator, Victory Ferries Ltd, by way of a lease from their bank. Victory Ferries Ltd has elected for tonnage tax with effect from 1 January 2000.
The bank's leasing subsidiary, Firth Ship Leasing Ltd, claims capital allowances for the year ended 31/12/2012 and for year ended 31/12/2013.
The ship is sold by Victory Ferries Ltd, as agent for Firth Ship Leasing Ltd, for £90m on 1/5/2014.
The capital allowances available to Firth Ship Leasing Ltd are as follows (amounts in £’000s):
Accounting period ended 31 December 2012
| £ | 8% pool | 8% pool | Non-qualifying | Total allowances | ||||
|---|---|---|---|---|---|---|---|---|
| Cost (100,000) | 40,000 | 40,000 | 20,000 | - | ||||
| WDA | 3,200 | 3,200 | - | 6,400 | ||||
| Balance carried forward | 36,800 | 36,800 | - | - | ||||
Accounting period ended 31 December 2013
| £ | 8% pool | 8% pool | Non-qualifying | Total allowances | ||||
|---|---|---|---|---|---|---|---|---|
| Balance brought forward | 36,800 | 36,800 | 20,000 | - | ||||
| WDA | 2,944 | 2,944 | - | 5,888 | ||||
| Balance carried forward | 33,856 | 33,856 | - | - | ||||
Accounting period ended 31 December 2014
| £ | 8% pool | 8% pool | Non-qualifying | Total allowances | ||||
|---|---|---|---|---|---|---|---|---|
| Balance brought forward | 33,856 | 33,856 | 20,000 | - | ||||
| Sold (90,000) | (36,000) | (36,000) | (18,000) | - | ||||
| Balance | (2,144) | (2,144) | 2,000 | - | ||||
| BC | - | - | - | (4,288) | ||||
Summary
Net allowances given: £8,000
Net cost to lessor: £10,000
References
Treatment of disposal proceeds TTM10450