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HMRC internal manual

Business Leasing Manual

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HM Revenue & Customs
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Sale of lessor companies and similar arrangements: partnerships: quantifying the TWDV figure amount

Section 421 CTA2011

This guidance covers transactions where the relevant day falls before 23 March 2011. See BLM81082 where the relevant day falls on or after 23 March 2011.

The TWDV figure is calculated in a way similar to the calculation for a company carrying on a business of leasing on its own account. See BLM80532.

Modifications are needed to the lessor company provisions because the accounting period of the lessor partnership is not brought to a close.

The TWDV figure is found by assuming that the partnership chargeable period (for the purposes of CAA 2001) ends on the relevant day - the day of the change - and a new chargeable period starts on the following day. This enables the TWDV of the various pools can be calculated.

In the same way as for lessor companies, the TWDV figure is adjusted to exclude any plant or machinery acquired by the partnership on the relevant day except for ‘relevant new expenditure’.

The TWDV amount is found by adding together:

  • unrelieved expenditure in single asset pools,
  • unrelieved expenditure in class pools, and
  • unrelieved expenditure in the main pool

carried forward into the new chargeable period under section 59 CAA 2001.

This figure is adjusted to exclude any amounts which relate to ‘relevant new expenditure’.

Relevant new expenditure means:

  • Expenditure on plant or machinery acquired on the relevant day unless it was acquired from an associated company.
  • Expenditure incurred on the relevant day but attributable to plant or machinery acquired by the lessor company before that day.

‘Plant or machinery acquired’ includes plant or machinery brought into use for the first time and both ‘incurred’ and ‘acquired’ include anything that is treated as acquired or incurred.

These adjustments ensure that there is consistency between assets reflected in the PM figure and assets reflected in the TWDV figure.

A ‘qualifying company’ is:

  • the partner company that you are considering
  • any company which is an associated company of that partner company
  • any other partner company whose interest in the business falls
  • any other partner company in relation to which there is a qualifying change of ownership on the day; and
  • any company which is an associated company of any other partner company mentioned in 3 or 4.

These companies are the same companies as were identified for the purposes of determining the PM figure in order to decide whether a company is carrying on a business of leasing plant or machinery in partnership.