TTM11320 - Offshore Activities: Capital allowances
Assets acquired after entry: Notional qualifying expenditure on qualifying assets
The rules for determining the notional qualifying expenditure in cases where the company was not entitled to capital allowances before entry into tonnage tax are in FA00/SCH22/PARA113.
Assets brought immediately into use
If the asset was brought into use for the purposes of the company's offshore activities immediately on being acquired by the company, the notional qualifying expenditure is equal to the amount that would fall to be brought into account as qualifying expenditure under CAA01/PART2 as if the special rules did not apply (that is, normally at cost).
Assets not immediately brought into use
If the asset was not brought into use for the purposes of the company's offshore activities immediately on being acquired by the company, the notional qualifying expenditure is the original amount of qualifying expenditure, as described in the previous paragraph, written down in respect of the period between its acquisition by the company and the time that it is brought into use for those purposes.
The basis on which the notional qualifying expenditure is to be written down is specified in SI00/2303/REG7. The method of computation is essentially the same as that used to determine the unrelieved qualifying expenditure for capital allowances purposes on an actual exit from the regime, see TTM09300 onwards.
- For assets other than long life assets or expensive motor vehicles the notional qualifying expenditure is the original amount of qualifying expenditure multiplied by the appropriate percentage from the table in TTM09310.
- For expensive motor vehicles the procedure is as described in TTM09320.
- For long life assets vehicles the notional qualifying expenditure is the original amount of qualifying expenditure multiplied by the appropriate percentage from the table in TTM09330.
In each case the appropriate percentage to be taken from the tables is the percentage that corresponds to the length of the period from the date of acquisition to the start of the period in which the asset began to be used for offshore activities.
References
| FA00/SCH22/PARA113 (notional qualifying expenditure: new asset) | TTM17641 |
| SI00/2303/REG4 (plant and machinery: writing-down basis) | TTM18004 |
| SI00/2303/REG5 (expensive motor cars: writing-down basis) | TTM18005 |
| SI00/2303/REG6 (long-life assets: writing-down basis) | TTM18006 |
| SI00/2303/REG7 (writing down basis for offshore P&M) | TTM18007 |
| Outline of capital allowance code for offshore activities | TTM11300 |
| Notional qualifying expenditure on existing assets | TTM11310 |