Partnerships: Capital allowances
On exit from Tonnage Tax: Example
A 33:33:34 partnership exists between:
- a tonnage tax company (X Ltd),
- a UK non tonnage tax company (Y Ltd), and
- a non-resident outside the charge to UK tax (C Inc.).
X Ltd and Y Ltd make up their accounts to 31 December each year.
The partnership has only one asset a ship which cost £12 million on 1 March 2009.
X Ltd leaves tonnage tax on 5 July 2010.
The partnership capital allowance claim made by Y Ltd for APE 31.12.2009 is £2 million in writing-down allowance.
Apply the formula in SI00/2303/REG8 (5), i.e.
(A% x B) + ((100% - A%) x C
In this case:
A=33% B=£9 million (75% of £12 million cost as asset has been held for less than a year) C=£10 million (£12 million cost less £2 million allowances claimed).
Substituting these values in the formula gives:
(33% x £9m) + (100% - 33%) x £10m which equals £2,970,000 + (67% x £10m) which equals £9,670,000.
£9,670,000 is the unrelieved qualifying expenditure (the ‘written down value’) for the partnership as at 1 January 2010.
|SI00/2303/REG8(5)-(6) (capital alloances formula when partner leaves tonnage tax)||TTM18008|
|Procedure on exit from tonnage tax||TTM13420|