Taxes Consolidation Act 1997 section 769C

Effect of lapse of capacity rights

Section 769C provides for balancing allowances and balancing charges where transmission capacity rights come to an end, cease to be used, or are sold before the end of the writing-down period.

• Where capacity rights end, cease to be exercised, or are sold before the end of the writing-down period, no further writing-down allowances are given from the chargeable period of the event onwards.
• A balancing allowance equal to the expenditure remaining unallowed (less any net sale proceeds) arises where rights end, cease to be used, or are sold for less than the unallowed expenditure; a balancing charge arises where net sale proceeds exceed the unallowed expenditure.
• Where part of the rights are sold without triggering a balancing charge, future writing-down allowances are recalculated by deducting the net sale proceeds from the expenditure remaining unallowed and dividing the result by the number of complete years remaining in the writing-down period.
• A balancing allowance can only be made where a writing-down allowance has been or could have been made, and a balancing charge cannot exceed the total writing-down allowances actually granted (net of any previous balancing charge).