CA50620 - MEA: Second-hand assets: restriction of relief
CAA01/S411 contains the rules for computing the buyer’s qualifying expenditure where the conditions in CAA01/S407 are satisfied. Expenditure on land is first restricted by CAA01/S404.
If, under the MEA code, no allowance was made to, or balancing charge made on, the previous trader then the buyer’s qualifying expenditure is the lesser of:
- his own expenditure,
- or the previous trader’s qualifying expenditure.
If however the previous trader did become entitled to an allowance or liable to a balancing charge in respect of his qualifying expenditure then the buyer’s expenditure is the lesser of:
- his actual expenditure,
and
- the residue of the previous trader’s qualifying expenditure (CAA01/S411 (3)).
The residue is defined in CAA01/S411 (4) as:
- the previous trader’s qualifying expenditure,
less
- the total of all MEA made to him in respect of that expenditure, plus
- the amount of any MEA code balancing charge made in respect of that expenditure.