The legislation at Schedule 10 FA 2006 counters the advantage
obtained on the sale of a lessor company when the timing benefits
derived from capital allowances have been taken by the selling
group and the deferred tax profits will fall out of taxation in the
hands of a loss- making buying group.
The Schedule also deals with partnership arrangements
designed to achieve a similar effect with the initial tax losses
being used by a profitable partner and the subsequent profits being
sheltered by a loss-making partner.
In each case the arrangements are intended to avoid the
recovery of tax where capital allowances have been given at a
greater rate than economic depreciation.
The Schedule deals with the sale of a lessor company and
similar partnership arrangements. Alternative means of avoiding the
recovery of deferred tax are countered by the following
provisions:
