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HMRC internal manual

Oil Taxation Manual

HM Revenue & Customs
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Corporation tax ring fence: first-year allowances for a ring fence trade: plant and machinery - restrictions

The 100% first-year allowances for a ring fence trade are contained within the general legislation in CAA 2001 for first-year allowances. The various rules that restrict the availability of allowances in certain circumstances also apply here. In particular, this means first-year allowances cannot be claimed if

  • the expenditure is incurred before 17 April 2002 by a company that has not yet started to trade on ring-fence plant and machinery, even if the trade commences on or after 17 April 2002. CAA2001\S50 disapplies, for the purposes of first-year allowances, the general provision in CAA2001\S12 that treats pre-commencement expenditure as incurred on the first day of trading (see CA23110 ),
  • the plant and machinery is transferred between connected companies - CAA2001\S214 and CAA2001\S217 (see CA28300),
  • there is a relevant transaction the sole or main benefit of which is the obtaining of plant and machinery allowance - CAA2001\S215 (see CA28300),
  • there is a sale and lease-back of the plant or machinery - CAA2001\S216 (see CA28300),
  • the asset is provided in connection with a change in the nature or conduct of a business carried on by someone else and the main benefit, or one of the main benefits, that could reasonably be expected from the change is obtaining a first-year allowance - CAA2001\S46(2) (see CA23110).