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HMRC internal manual

Capital Allowances Manual

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HM Revenue & Customs
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PMA: Fixtures: Purchaser of land giving consideration for fixture

CAA01/S181

Where a person acquires for a capital sum an existing interest in land (for example, freehold or leasehold), which includes a fixture, the person is treated as owning the fixture as a result of incurring the part of the sum that relates to the fixture.

This does not apply if, when the interest is acquired, the same or some other person is entitled to and claims or has claimed capital allowances on the fixture by virtue of some other interest in land (for instance a superior or inferior interest). This is called having a prior right in relation to the fixture.

Example As in the example at CA26025  Xanadu Properties Plc owns the freehold of Kane House, an office block, which it leases to its tenant, Budokan Computers. Xanadu Properties Plc installs central heating before it leases Kane House to Budokan computers and claims PMAs on the central heating. Budokan Computers installs air conditioning on which it claims PMAs. After the air conditioning has been installed in Kane House, Budokan assigns its lease to Shangri-la Software for a capital sum.

After the assignment of the lease Shangri-la Software can claim PMAs on the air conditioning but not on the central heating. Xanadu Properties Plc has the freehold interest in the relevant land (Kane House) and a prior right in relation to the central heating. The air conditioning is different. Budokan computers had a leasehold interest inthe relevant land for the air conditioning when they installed it and they no longer have it after the assignment of the lease. Shangri-la Software has acquired that interest.

The part of the capital sum that relates to the fixture is found by apportioning the capital sum between the fixture and the rest of the land. The apportionment is made under CAA01/S562 CA12300 except where the purchaser and vendor make a joint election under CAA01/S198 CA26800 to determine the amount apportioned to the fixture.