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Finance Act 2012

Section 45L Exclusion of plant and machinery partly for use outside designated assisted areas.

15.New Section 45L is an anti avoidance rule to prevent exploitation where the company incurring the expenditure intends to use the plant or machinery outside the designated assisted area, but enters into “relevant arrangements”, designed to meet the “for use primarily in the area” test, where the main, or one of the main, purposes of those arrangements is to obtain the FYA, or a greater amount of FYA.  For example, a bus operator group of companies, that would normally have set up two new companies to operate two new bus fleets of similar size in two different areas (where one is a designated assisted area and the other is not), might seek to exploit the new FYAs by setting up one company and using both fleets alternately in both areas, to contrive the result that both fleets are used just over 50 per cent in the designated assisted area.  In such a case, the part (here, one-half) of the combined fleet which the group intended to use outside of the designated assisted area would be determined on a just and reasonable basis, and the expenditure on that part would be excluded from the FYA.

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