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Fixed values

02 October 2012
Issue: 4373 / Categories: Forum & Feedback , Business , Capital Gains , Income Tax
A partnership that has made substantial capital allowances claims on fixtures at its premises is to be incorporated. Advice is required on the interaction of CAA 2001, s 187A, which requires the value to be fixed, and s 266, which relates to connected parties

I am in the process of incorporating a trading partnership which has made significant capital allowance claims on the fixtures inherent in the premises. All assets and liabilities will be transferred in exchange for shares in the company.

I am aware of the new requirement from April 2012 of the need to fix the disposal value of the fixtures under CAA 2001 s 187A(5) if the company is to be eligible for capital allowances going forward.

However an election under CAA 2001 s 266 is being considered to transfer the fixtures (and chattels) at tax written down value (TWDV). How does this interact with the “fixed value requirement”?

CAA 2001 s 267 describes the effect of the election. It states that the relevant plant and machinery is treated as sold for a price that avoids balancing adjustments (TWDV). So we technically have a disposal...

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