Commentary

D1.1130 Anti-avoidance—corporate tax transfer of deductions

Corporate tax
Corporate tax | Commentary

D1.1130 Anti-avoidance—corporate tax transfer of deductions

Corporate tax | Commentary

D1.1130 Anti-avoidance—corporate tax transfer of deductions

To extend the anti-avoidance measures in place which restrict the utilisation of crystallised losses (see D1.1126, D1.1127 and D1.1127B), the transfer of deductions rules1 also restrict deductions which have not yet been recognised for tax but which are highly likely to be deducted after a qualifying change in ownership of the company. A qualifying change is defined in the capital allowances TAAR (see B3.364)2. In essence there will be a qualifying change when there is a change in the company ownership structure or the company acquires an increased share in a company or partnership, or an activity.

The rules are split into two types, a deductions transfer anti-avoidance rule and a profits transfer anti-avoidance rule. If both the profits transfer rule and the deductions transfer rule apply, the former takes priority3. Both the deductions transfer and the profits transfer rules restrict access to deductible amounts in certain circumstances. The restricted deductible amounts that cannot be brought into account as deductible expenses for these purposes are4:

  1.  

    •     an expense of a trade other than research and development allowances treated as expenses under CAA 2001, s 450 (see B3.706)

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