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HMRC internal manual

Capital Allowances Manual

General: successions: partnership changes


A partnership change that is not treated as a permanent discontinuance by

ITTOIA 2005/Ss 246(3), (4) and 353 (2), (3), (formerly ICTA88/S113 (1)) or

CTA 2009 /S41 (2) Sch 1 para 519 (3), (formerly ICTA88/S337 (1))

is not treated as a cessation for capital allowance purposes apart from PMA, RDA and ATA. Capital allowances are calculated as if the new partnership had been carrying on the business from the start and had done everything that the original partnership had done.


Chris and Ivor were in partnership. They built a recording studio for £750,000 on land that the partnership owned and claimed IBAs. Three years later Geoff joined the partnership. This change was not treated as a permanent cessation of the business. The enlarged partnership continued to claim IBAs and four years later they sold the recording studio for £740,000 excluding the land. The balancing charge was calculated as if:

  • the partnership of Chris, Ivor and Geoff had built the studio when Chris and Ivor did, and
  • that partnership had claimed all the IBAs that Chris and Ivor did.