Capital allowances: anti-avoidance - technical note
The Financial Secretary to the Treasury (Stephen Timms): The Government is taking action today Tuesday 21 July 2009 to counter tax avoidance schemes involving capital allowances on plant or machinery.
Legislation will be introduced in the 2010 Finance Bill, to prevent tax avoidance through the transfer of an entitlement to benefit from capital allowances on plant or machinery, used for the purpose of a trade, where the tax written down value of the plant or machinery exceeds its balance sheet value (‘latent capital allowances’).
The proposed legislation will apply where there is a change of ownership of a company as part of arrangements one of the main purposes of which is to transfer to the purchasing group an entitlement to benefit from the latent capital allowances available to the company which is purchased.
The proposed legislation will also apply where there is a change in ownership or profit-shares of a consortium company, or partnership involving companies, as part of arrangements where one of the main purposes is to transfer the entitlement to benefit from the latent capital allowances.
Draft legislation, which will take effect from today, 21 July 2009, will be published as soon as practicable.
A technical note explaining the material that will be contained in Finance Bill 2010 is now available.
