Part 2

Plant and machinery allowances
Chapter 17

Other anti-avoidance

Restrictions on allowances

Transactions to obtain tax advantages
215
1
Allowances under this Part are restricted
, and balancing charges are imposed or increased,
under the applicable sections if
B and S enter into a relevant transaction
that either—
a
has an avoidance purpose, or
b
is part of, or occurs as a result of, a scheme or arrangement that has an avoidance purpose.
2
Subsection (1)(b) may be satisfied—
a
whether the scheme or arrangement was made before or after the relevant transaction was entered into, and
b
whether or not the scheme or arrangement is legally enforceable.
3
A transaction, scheme or arrangement has an “avoidance purpose” if the main purpose, or one of the main purposes, of a party in entering into the transaction, scheme or arrangement is to enable a person to obtain a tax advantage under this Part that would not otherwise be obtained.
4
The reference in subsection (3) to obtaining a tax advantage that would not otherwise be obtained includes—
a
obtaining an allowance that is in any way more favourable to a person than the one that would otherwise be obtained
, and
b
avoiding liability for the whole or part of a balancing charge to which a person would otherwise be liable.
4A
If the tax advantage relates to the disposal value of the plant or machinery under the relevant transaction (whether by obtaining a more favourable allowance or by avoiding the whole or part of a balancing charge) then—
a
the applicable section is section 218ZB, and
b
the tax advantage is to be disregarded for the purposes of subsection (6) and (8)(b).
5
If the tax advantage is of a kind described in subsection (7), “the applicable sections” are sections 217 and 218ZA(5).
6
Otherwise, “the applicable sections” are sections 217 and 218ZA(1) or, as the case may be, 218ZA(3).
7
The kinds of tax advantage are—
a
that an allowance to which B is entitled for a chargeable period is calculated using a percentage rate that is higher than the one that would otherwise be used, or
b
that B is entitled to an allowance in respect of an amount of capital expenditure sooner than B would otherwise be entitled to it.
8
If a transaction, scheme or arrangement involves—
a
a tax advantage of a kind described in subsection (7), and
b
a tax advantage not of such a kind,
subsections (5) and (6) have effect separately in relation to each tax advantage.
Pt. 2 modified (24.2.2003) by Proceeds of Crime Act 2002 (c. 29), s. 458(1), Sch. 10 para. 12 (with Sch. 10 para. 17(1)); S.I. 2003/120, art. 2, Sch. (with arts. 3 4) (as amended (20.2.2003) by S.I. 2003/333, art. 14)
S. 45H(2) modified (with effect in accordance with s. 167 of the amending Act) by Finance Act 2003 (c. 14) , Sch. 30 para. 7
Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 4 para. 4 ; S.I. 2004/2575 , art. 2(1) , Sch. 1
Pt. 2 modified (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 paras. 9(2), 21(2) (with s. 38(2)); S.I. 2004/2575, art. 2(1) , Sch. 1
Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 paras. 10, 22 (with s. 38(2) ); S.I. 2004/2575 , art. 2(1) , Sch. 1
Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 19
Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 35
Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 paras. 36, 37
Pt. 2 modified (21.7.2009) by Finance Act 2009 (c. 10), s. 24
Pt. 2 Ch. 17 heading substituted (8.4.2010) (with effect in accordance with Sch. 4 para. 5 to the amending Act) by Finance Act 2010 (c. 13), Sch. 4 para. 3
S. 215 substituted (with effect in accordance with Sch. 9 para. 9(1)(3) of the amending Act) by Finance Act 2012 (c. 14), Sch. 9 para. 1
Pt. 2 modified (17.7.2013) by Finance Act 2013 (c. 29), s. 73(7)-(11) (with s. 73(6))
S. 215(4A) inserted (with effect in accordance with s. 70(11) of the amending Act) by Finance Act 2016 (c. 24), s. 70(8)
Words in s. 215(1) inserted (with effect in accordance with s. 70(11) of the amending Act) by Finance Act 2016 (c. 24), s. 70(6)(a)
Words in s. 215(1) substituted (with effect in accordance with s. 70(11) of the amending Act) by Finance Act 2016 (c. 24), s. 70(6)(b)
Word in s. 215(4) inserted (with effect in accordance with s. 70(11) of the amending Act) by Finance Act 2016 (c. 24), s. 70(7)(a)
S. 215(4)(b) and preceding word inserted (with effect in accordance with s. 70(11) of the amending Act) by Finance Act 2016 (c. 24), s. 70(7)(b)
Pt. 2 modified (10.6.2021) by Finance Act 2021 (c. 26), s. 9(1)(a)