Taxes Consolidation Act 1997 section 312

Special provisions as to certain sales

Section 312 substitutes an open market price for the actual sale price of property sold between associated persons, or where the sale appears to have been arranged primarily to obtain a capital allowance, for the purposes of capital allowances in respect of industrial buildings or structures, machinery or plant, dredging, mining and scientific research.

• Where property is sold between parties under common control, or where the sole or main benefit of a sale is to obtain a capital allowance, the open market price is substituted for the actual sale price for capital allowance purposes.
• Where machinery or plant is sold under common control, the substituted price is limited to the lower of the open market price and the seller's original capital expenditure on providing the asset.
• In a common control situation, the parties may jointly elect to substitute the asset's tax written down value for the open market price, in which case the seller has no balancing charge but the buyer writes off a reduced amount over the asset's remaining life.
• The joint election option is not available where any party to the sale is non-resident, unless the non-resident party is entitled to a capital allowance or subject to a balancing charge as a result of the sale.