PMA on Fixtures already Installed on Leased Land or Building
Where a fixture goes along with the leased property to a lessee, the owner of the fixture is determined by the particular facts of the case.
Where the lessor was or would have been entitled to claim PMA on the fixture, and the lessee pays a premium for the lease that is treated as capital expenditure for the fixture, the lessor and lessee can elect to treat the lessee as the deemed owner of the fixture. If such an election is made, the lessee becomes entitled to claim PMA on the fixture.
The lessor will then show a disposal event for the fixture.
On the other hand, if the lessor was not entitled to claim PMA on the fixture, then the lessee, who carries on the qualifying activity in which the fixture is used, will be treated as the owner of the fixture entitled to claim PMA. This usually happens when the lessor is holding the fixture in a trading capacity and not for a qualifying activity.
If it so happens that the PMA has already been claimed by another person entitled to claim it, for example, if the lessor had earlier leased the fixture to a person carrying on a qualifying activity (and claims PMA on the fixture), and subsequently grants a superior lease to another person, this latter person will not be entitled to claim PMA on the fixture.
Where a lessee incurs expenditure on installing a fixture, and the lessor makes a contribution towards the cost, the latter can claim PMA on the contribution if the lessee, who is the deemed owner of the fixture, is entitled to PMA.
It will be noticed that the rules relating to PMA are more than a bit complex. Taxpayers should consult a specialist on capital allowances for immoveable property to ensure that they claim what they are entitled to.
For more information visit the authors site Cash Pension or Lump Sum Pension