669C Effect of sale of quota.

(1) Where a person incurs qualifying expenditure on the purchase of a qualifying quota and, before the end of the writing-down period, any of the following events occurs—

(a) the person sells the qualifying quota or so much of the quota as the person still owns;

(b) the qualifying quota comes to an end or ceases altogether to be used;

(c) the person sells part of the qualifying quota and the net proceeds of the sale (in so far as they consist of capital sums) are not less than the amount of the qualifying expenditure remaining unallowed;

no writing-down allowance shall be made to that person for the chargeable period related to the event or any subsequent chargeable period.

(2) Where a person incurs qualifying expenditure on the purchase of a qualifying quota and, before the end of the writing-down period, either of the following events occurs—

(a) the qualifying quota comes to an end or ceases altogether to be used;

(b) the person sells all of the qualifying quota or so much of that quota as the person still owns, and the net proceeds of the sale (in so far as they consist of capital sums) are less than the amount of the qualifying expenditure remaining unallowed;

there shall, subject to and in accordance with this Chapter, be made to that person for the ^[2]>accounting period^<[2][2]>chargeable period^<[2] related to the event an allowance (in this Chapter referred to as a “balancing allowance”) equal to—

(i) if the event is the qualifying quota coming to an end or ceasing altogether to be used, the amount of the qualifying expenditure remaining unallowed, and

(ii) if the event is a sale, the amount of the qualifying expenditure remaining unallowed less the net proceeds of the sale.

(3) Where a person who has incurred qualifying expenditure on the purchase of a qualifying quota sells all or any part of that quota and the net proceeds of the sale (in so far as they consist of capital sums) exceed the amount of the qualifying expenditure remaining unallowed, if any, there shall, subject to and in accordance with this Chapter, be made on that person for the chargeable period related to the sale a charge (in this Chapter referred to as a “balancing charge”) on an amount equal to—

(a) the excess, or

(b) where the amount of the qualifying expenditure remaining unallowed is nil, the net proceeds of the sale.

(4) Where a person who has incurred qualifying expenditure on the purchase of a qualifying quota sells a part of that quota and subsection (3) does not apply, the amount of any writing-down allowance made in respect of that expenditure for the chargeable period related to the sale or any subsequent chargeable period shall be the amount determined by—

(a) subtracting the net proceeds of the sale (in so far as they consist of capital sums) from the amount of the expenditure remaining unallowed at the time of the sale, and

(b) dividing the result by the number of complete years of the writing-down period which remained at the beginning of the chargeable period related to the sale,

and so on for any subsequent sales.

(5) References in this section to the amount of any qualifying expenditure remaining unallowed shall in relation to any event be construed as references to the amount of that expenditure less any writing-down allowances made in respect of that expenditure for chargeable periods before the chargeable period related to that event, and less also the net proceeds of any previous sale by the person who incurred the expenditure of any part of the qualifying quota acquired by the expenditure, in so far as those proceeds consist of capital sums.

(6) Notwithstanding subsections (1) to (5)—

(a) no balancing allowance shall be made in respect of any expenditure unless a writing-down allowance has been, or, but for the happening of the event giving rise to the balancing allowance, could have been, made in respect of that expenditure, and

(b) the total amount on which a balancing charge is made in respect of any expenditure shall not exceed the total writing-down allowances actually made in respect of that expenditure less, if a balancing charge has previously been made in respect of that expenditure, the amount on which that charge was made.