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HMRC internal manual

Capital Allowances Manual

MEA: Allowances and charges: Disposal receipts: general

A disposal receipt is brought into account where qualifying expenditure has been incurred on an asset and that asset is disposed of or otherwise ceases to be permanently used for the purposes of the trade of mineral extraction. The receipt is brought into account for the chargeable period related to the disposal or cessation of use.

Permanent cessation of use includes the case where a company ceases to be resident in the UK through a branch or agency. It also includes the case where the requirement under planning permission or other such agreement to restore land upon cessation of mining activities has been satisfied.

The amount of the disposal receipt to be brought in is the disposal value of the asset determined in accordance with the rules dealing with plant and machinery.

Note that where a person receives any capital sum reasonably attributable to qualifying expenditure incurred by him, that sum is brought into account as a disposal receipt.

The legislation in CAA01/S570A applies to prevent the making of a balancing allowance when the amount of the disposal receipt is affected by a tax avoidance scheme CA17000.