Commentary on Sections Glossary Structure of Part 2 Section 199: Election to apportion capital sum given by lessee on grant of lease
714.This section is also based on part of section 59B(1) to (4). It provides that the parties to a transaction may elect to fix a disposal and acquisition value in respect of a fixture in cases dealt with by item 5 of the Table in section 196.
715.Subsection (2) ensures that the amount fixed by the election is to be used as the disposal value instead of the value determined by item 5. It also ensures that the amount is to be used for other purposes of this Part. In particular, if the incoming lessee is to claim allowances in respect of the fixture then the election will determine the expenditure treated as incurred. In all cases, this subsection provides that the election must be made jointly by the lessor and the lessee.
716.Subsection (3) provides two limits for the amount that may be fixed under an election under this provision. The amount may not exceed the actual capital sum incurred by the lessee. It must also not exceed the amount which was treated as incurred by the lessor on the provision of the fixture.
717.Subsection (4) deals with the attribution of any part of the capital sum not attributed to the fixture by the election.
718.Subsection (5) provides that an election cannot override a restriction on allowances under section 186 or 187. If appropriate, those sections still apply to limit the lessee’s expenditure that may be brought into account under the rules for plant and machinery allowances.
719.The subsection also ensures that the lessor’s disposal proceeds may still be substituted by the notional written-down value in avoidance cases (see section 197).