Section 198 Election – CA26850 – PMA: Fixtures: Election procedure

CAA01/S200 – S201

An election under CAA01/S198 or S199 must be made by notice in writing to HMRC. Section 198 Election

It should contain the following information:

• Section 198 Election – the amount fixed by the election,
• Section 198 Election – the name of each person making the election,
• Section 198 Election – information sufficient to identify the fixture and the relevant land,
• Section 198 Election – particulars of the interest acquired by or the lease granted to the purchaser; and
• Section 198 Election – the tax district references of each of the persons making the election.

The section 198 election is irrevocable.

The time limit for making the election is two years after the time when the interest is acquired by the buyer or the buyer is granted the lease. Section 198 Election

A copy of the election must be included with each party’s return for the first period affected by it. This will normally be the period in which the disposal or acquisition takes place. Section 198 Election

The amount apportioned to the fixture must be quantified when the election is made. Section 198 Election

There may be cases where because of circumstances arising after the making of the election the maximum amount is reduced below the figure specified in the election. If this happens the election is deemed to have specified the reduced maximum amount. Section 198 Election

Where an election is made by a partnership, the return that the election must accompany is the partnership return. Section 198 Election

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Asset and related value apportionments

The fixtures rules work on an asset-by-asset basis. In practice, you may accept a degree of amalgamation of assets where this will not distort the tax computation. However, following the introduction of the new classification of ‘integral features’ in respect of relevant expenditure incurred on or after 1 April 2008 (CT) or 6 April 2008 (IT) CA22300, it will be necessary to distinguish between -

(i) fixtures that are ‘integral features’ and so qualify for WDAs at the 10% rate in the special rate pool, and

(ii) fixtures that qualify for WDAs at the 20% rate in the main P&M pool; and

because to do otherwise would clearly have the potential to distort the tax computation, which would be unacceptable. So, following the Section 198 Election FA08 changes, it is now less likely that you will be able to accept an election covering all the fixtures in a particular property without requiring some apportionment of value between groups (i) and (ii) above. It has never been regarded as reasonable to accept a Section 198 Election covering all the fixtures for a portfolio of properties.

Where a body of Commissioners has to determine a question relating to a Section 198 election or Section 199 election:

1. Section 198 Election – each of the persons who made the election is entitled to appear and be heard by, or make written representations to, the Commissioners;
2. Section 198 Election – the Commissioners will determine the question separately from any other question;
3. Section 198 Election – their determination has effect as if it was the determination of an appeal to which each of the persons who made the election was a party.