669C Effect of sale of quota

Summary

Where a person has incurred expenditure on the purchase of a qualifying quota, the grant of the writing-down allowance, provided for in section 669B would, if continued for the whole of the writing down period, completely write off that expenditure. It may happen, however, that before the end of that period has been reached the qualifying quota comes to an end or ceases to be used, or the person enjoying the annual allowance may sell part or all of the qualifying quota. This section provides for certain balancing allowances or charges in these circumstances.

Details

Stop on further allowances

(1) If, before the end of the writing down period —

• the qualifying quota is sold, or
• it comes to an end or ceases to be used, or
• part of it is sold for an amount not less than the unused allowance,

then no further writing down allowance is given for that or any subsequent chargeable period.

Balancing allowances

(2) Where, before the end of the writing down period —

• the qualifying quota comes to an end or ceases to be used, or
• the qualifying quota is sold for less than the unused allowance,

then the person is entitled to an allowance (balancing allowance) equal to the amount of the unused allowance, or in a case where the qualifying quota is sold, less the sale proceeds.

Balancing charges

(3) Where, before the end of the writing-down period, all or any part of the qualifying quota is sold for an amount in excess of the unused allowances, then a charge (balancing charge) is applied for the chargeable period in which the disposal took place equal to the sale proceeds less the amount, if any, of unused allowances remaining at that time.

Part-sale

(4) Where there is a sale of part only of the qualifying quota and a balancing charge does not apply because the sale proceeds are less than the unused allowances, no balancing allowance is made. In addition, future writing down allowances for the seller (who retains part of the qualifying quota) over the remaining writing-down period are to be adjusted. They are computed by deducting the sale proceeds from the unused allowances and dividing by the number of years of the writing-down period remaining.

Expenditure remaining unallowed

(5) The expression “expenditure remaining unallowed” is defined for the purposes of this section as original expenditure, less any writing-down allowances already made and less also the net proceeds of any previous sale of a part of the qualifying quota.

Miscellaneous

(6) Provision is made that no balancing allowance is to be granted except where a writing-down allowance has been or could have been made. This ensures that balancing allowances are granted only to persons referred to in the section. There is also the stipulation restricting the amount on which a balancing charge may be made to the aggregate of the allowances already enjoyed in respect of the expenditure (in so far as there have not already been withdrawn by any previous balancing charge).

Relevant Date: Finance Act 2021