Section 89 Disposal to connected person

United Kingdom

(1)

This section applies if, at any time before the F1relevant cut-off, a person (“the transferor”) disposes of a short-life asset to a connected person.

(2)

Subject to subsection (6)—

(a)

the transferor is to be treated as having sold the short-life asset to the connected person for an amount equal to the available qualifying expenditure in the short-life asset pool for the chargeable period in which the disposal occurs, and

(b)

the connected person is to be treated as having incurred qualifying expenditure of the same amount in buying the short-life asset.

(3)

Subject to subsection (6)—

(a)

sections 217 and 218 (restrictions on first-year and other allowances in the case of certain transactions between connected persons, to obtain a tax advantage etc.), and

(b)

F2section 225 (further restrictions in the case of sale and finance leaseback),

do not apply to the disposal.

(4)

Immediately after the disposal of the short-life asset, the connected person is to be taken to have made an election under section 83 (so that the plant or machinery is a short-life asset in his hands).

(5)

In relation to the connected person, “the F3relevant cut-off” means the date that would have been the relevant cut-off in relation to the transferor.

(6)

Subsections (2) and (3) apply in relation to a disposal only if—

(a)

the transferor, and

(b)

the connected person,

elect that they should apply.

(7)

An election under subsection (6) must be made by notice given to F4an officer of Revenue and Customs no later than 2 years after the end of the chargeable period in which the disposal occurred.

Annotations

Textual amendments

F1: Word in s. 89(1) substituted (19.7.2011) by Finance Act 2011 (c. 11), s. 12(5)
F2: Word in s. 89(3)(b) substituted (with effect in accordance with Sch. 20 para. 6(19) of the amending Act) by Finance Act 2008 (c. 9), Sch. 20 para. 6(7)
F3: Word in s. 89(5) substituted (19.7.2011) by Finance Act 2011 (c. 11), s. 12(5)
F4: Words in Act substituted (18.4.2005) by Commissioners for Revenue and Customs Act 2005 (c. 11), s. 53(1), Sch. 4 para. 83(1); S.I. 2005/1126, art. 2(2)(h)

Notes on Part 2

Modifications

C1: Pt. 2 modified (24.2.2003) by Proceeds of Crime Act 2002 (c. 29), s. 458(1), Sch. 10 para. 12 (with Sch. 10 para. 17(1)); S.I. 2003/120, art. 2, Sch. (with arts. 3 4) (as amended (20.2.2003) by S.I. 2003/333, art. 14)
C2: Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 paras. 10, 22 (with s. 38(2) ); S.I. 2004/2575 , art. 2(1) , Sch. 1
C3: Pt. 2 modified (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 paras. 9(2), 21(2) (with s. 38(2)); S.I. 2004/2575, art. 2(1) , Sch. 1
C4: Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 4 para. 4 ; S.I. 2004/2575 , art. 2(1) , Sch. 1
C5: Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 19
C6: Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 35
C7: Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 paras. 36, 37
C8: Pt. 2 modified (21.7.2009) by Finance Act 2009 (c. 10), s. 24
C9: Pt. 2 modified (17.7.2013) by Finance Act 2013 (c. 29), s. 73(7)-(11) (with s. 73(6))
C10: Pt. 2 modified (10.6.2021) by Finance Act 2021 (c. 26), s. 9(1)(a)