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HMRC internal manual

Capital Allowances Manual

PMA: Fixtures: Election to fix apportionment

CAA01/S198 - S200

Where an interest in land that includes a fixture is sold, the buyer normally has to apportion the sale price to determine the part that relates to the fixture. The apportionment has to be referred to the District Valuer CA12300. There is legislation that lets the parties to the sale fix the amount attributable to the fixture provided that the seller has claimed capital allowances. This means that fewer cases will need to be referred to the District Valuer. If no election is made the existing rules about apportionments apply. However, the election has no effect on the capital gains tax position, and you may still need to seek valuations from the District Valuer for capital gains tax purposes (see CG14771 - CG14796 and CG74150 - CG74160).

Where a disposal value of a fixture is required to be brought to account by the former owner in a case where:

  • there is a sale of the qualifying interest at or above market value, or
  • an incoming lessee has paid a premium for an interest in land that includes a fixture,

the buyer/ lessee and the former owner make a joint election.

The election fixes the amount treated as:

  • the part of the sale price on which the buyer can claim PMAs as expenditure on the provision of the fixture, or
  • the part of the premium, which is treated as expenditure by the lessee as expenditure on the provision of the fixture.

The amount apportioned to a fixture may not exceed:

  • the amount that the seller was able to claim allowances on in respect of the fixture, or
  • the sale price of the interest in land, or
  • the premium.

The remainder, if any, of the sale price or premium is attributed to the other property included in the sale. It should be apportioned between the other property where necessary.

This agreed apportionment replaces any apportionment that would have been made under CAA01/S562 CA12300.

You cannot dispute the amount apportioned to a fixture under an election provided that itis within the limits above.

Guidance about the election procedure is in CA26850.

An election may not be made if CAA01/S197 (disposal values in avoidance cases) CA26750 applies.

If there is evidence that elections are being mis-used to avoid tax you should send a brief report of the facts and the suspected abuse to CT&VAT (Technical).