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HMRC internal manual

Capital Allowances Manual

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HM Revenue & Customs
Updated
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PMA: Partnerships and successions: Successions general

CAA01/S265

These are the rules that apply where there is a succession to the whole of a qualifying activity and the qualifying activity is treated as discontinued by ITTOIA05 / Ss 77,79,173,182,246,258,353,361,860 ( formerly ICTA88/S113) or CTA09/ S41 (2), Sch 1 para 519 (3) ( formerly ICTA88/S337 (1)) when the succession takes place.

Any property which:

  • was used by the predecessor for the purposes of the qualifying activity immediately before the succession,
  • is used by the successor for the purposes of the qualifying activity immediately after the succession, and
  • is transferred by the predecessor to the successor without being sold,

 

is treated as if the predecessor had sold it to the successor at market value when the succession takes place.

The successor is entitled to WDAs but not FYAs.

Example Clark runs a record shop. He transfers the business including the cash register to Harris free of charge. Clark is treated as selling the cash register to Harris at its market value when Harris took over the business. Harris is treated as buying the cash register at its market value. He can claim WDAs but not FYA on the cash register.