CA28100 - PMA: Anti-avoidance: Introduction

You may have a case where the taxpayer is using the capital allowance legislation in a way that it was not intended to be used. Here is an example.

Example

Frank and Jesse are brothers. They are both motor dealers. Frank buys a car transporter for £120,000 and adds the expenditure to his pool of qualifying expenditure. He sells the car transporter to Jesse for £200,000. Frank brings a disposal value of £120,000 (sale proceeds £200,000 restricted to cost, £120,000) to account. Jesse claims AIA on the £200,000 he has paid Frank for the car transporter. If this scheme worked the brothers would have obtained PMAs on expenditure of £200,000 for a car transporter that cost them £120,000.

The anti-avoidance legislation in Chapter 17 Part 2 CAA01 stops the scheme working. Broadly, it prevents the acceleration or uplift in capital allowances on a:

  • transaction between connected persons CA28800 (a connected person transaction),
  • a sale and leaseback, or
  • a transaction to obtain a tax advantage.

In the above example, the effect of the anti-avoidance legislation would be to resrict Jesse바카라 사이트™s qualifying expenditure to £120,000 (Frank바카라 사이트™s disposal value) and to prevent Jesse from claiming AIA or FYAs in respect of the expenditure.

There are further restrictions where an asset is sold and leased back under a finance lease (see CA28400+) and where a person transfers an asset which is subsequently made available to that person or a connected person under a hire purchase or similar contract (see CA28700).