CA23128 - Plant and Machinery Allowance (PMA): First Year Allowance (FYA): Plant and machinery in freeport and investment zone special tax sites: Plant and machinery subsequently primarily used or held for use outside special tax sites

CAA01/S45R

In order to ensure that plant and machinery continues to be primarily used, or held for use, within a special tax site, and so long as the plant or machinery is owned by the company that incurred the expenditure or a person connected CA11630 with it, the expenditure on the provision of plant or machinery is to be treated as never having been first-year qualifying expenditure if the circumstances outlined below arise at any time within a period of 5 years beginning with the earlier of:

• the day on which the plant or machinery is first brought into use for a qualifying activity
• the day on which the plant or machinery is first held for such use.

The circumstances are that either:

• the plant or machinery’s primary use is in an area which was not a special tax site at the time the expenditure was incurred
• the plant or machinery is held for use otherwise than primarily in an area which was a special tax site at the time the expenditure was incurred.

Where under these rules the FYA claimed is withdrawn, other capital allowances can be claimed as if the FYA was never available for the qualifying expenditure. All amendments, and adjustments of assessments are to be made to give effect to the withdrawal of the FYA.

If a person, who has made a tax return, becomes aware that it has become incorrect as a result of the above rule, that person is required to give notice to an officer of HMRC with details of the corrections which need to be made. The notice must be given within 3 months of becoming aware the return has become incorrect.