Capital Allowances Act 2001 section 170

Participator's expenditure attributable to plant or machinery

Section 170 deals with capital allowances for a participator who acquires an interest in a production sharing contract and pays an amount partly attributable to plant or machinery already used under that contract.

• When a participator buys into a production sharing contract and part of the purchase price relates to plant or machinery deemed owned by the contractor or another participator, that plant or machinery is re-attributed to the new participator for capital allowances purposes.
• The previous deemed owner is treated as having disposed of the plant or machinery for a consideration equal to the portion of the new participator's acquisition cost that is attributable to it.
• The new participator is treated as having incurred capital expenditure on the plant or machinery, capped at the lower of the amount attributable to it and the disposal value brought into account by the previous owner.
• The split of the total acquisition cost between plant or machinery and other elements is determined on a just and reasonable basis.