The availability of tax deductions based on a company’s
depreciation policies in respect of its intangible assets may well
create relatively novel opportunities for tax avoidance. In many
circumstances these possibilities are addressed by the rules
outlined earlier in this section of the manual. But, as a second
line of defence, Schedule 29 contains an anti-avoidance rule aimed
at predominantly tax-driven arrangements intended to take advantage
of this approach.
The rule should only need to be invoked rarely and usually
only in cases where substantial amounts of tax are at stake.
Moreover, before enquires intended to establish whether the
provision may be in point are opened, it needs to be borne in mind
that the work in taking enquires to their conclusion is likely to
be time consuming and resource intensive, both for the Inland
Revenue and for the company concerned.
Where inspectors, having established the facts, consider
there is a good case for applying paragraph 111 they should seek
the advice of technical specialists in Business Tax (Technical)
before putting forward detailed contentions.
The specialists are also very willing to give informal advice
at an earlier stage, in relation to enquiries intended to establish
whether there is a case for applying the anti-avoidance rule.
Guidance on paragraph 111 is organised as follows:
