The following Tax practice note Produced in partnership with Martin Wilson provides comprehensive and up to date legal information covering:
For both plant and machinery allowances and structures and buildings allowances (SBAs), anti-avoidance rules exist to prevent persons from obtaining a tax advantage by entering into tax-motivated arrangements. For SBAs, these operate by making such adjustments as are just and reasonable, see Practice Note: Structures and buildings allowances.
The anti-avoidance rules for plant and machinery are more extensive, and the remainder of this Practice Note deals with those.
There are both general and specific anti-avoidance provisions applying to capital allowances for plant and machinery. General provisions exist to ensure assets may not be transferred, for example between connected persons or in any case where the sole or main purpose is not a commercial one, in such a way as to obtain an advantage in relation to capital allowances.
There is also anti-avoidance legislation that affects specific provisions within the capital allowances rules. For example, there are anti-avoidance rules affecting integral features (see Practice Note: Plant and machinery allowances—integral features—Anti-avoidance), short life assets (see Practice Note: Plant and machinery allowances—types and rates—Short-life assets) and restrictions on the use of the annual investment allowance (see Practice Note: Plant and machinery allowances—types and rates—Annual investment allowance).
This Practice Note deals with the general anti-avoidance provisions affecting:
transactions with a main purpose of obtaining capital allowances, and
the practice known as capital allowance buying
The rules applying to transfers of assets between connected
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