Part 3Property income

Chapter 3Profits of property businesses: basic rules

Calculation of profits: other general rules

274Relationship between rules prohibiting and allowing deductions

(1)

Any relevant permissive rule in this Part—

(a)

has priority over any relevant prohibitive rule in this Part, but

F1(b)

is subject to—

(i)

section 36 (unpaid remuneration), as applied by section 272,

(ii)

section 38 (employee benefit contributions), as applied by sections 272 and 272ZA,

(iii)

section 48 (car hire), as applied by section 272,

(iv)

section 55 (crime-related payments), as applied by sections 272 and 272ZA,

(v)

section 272A (finance costs), and

(vi)

section 307D (cash basis: modification of deduction for costs of loans).

F2(1A)

But, if the relevant permissive rule would allow a deduction in calculating the profits of a property business in respect of an amount which arises directly or indirectly in consequence of, or otherwise in connection with, relevant tax avoidance arrangements, that rule—

(a)

does not have priority under subsection (1)(a), and

(b)

is subject to any relevant prohibitive rule in this Part (and to the provisions mentioned in subsection (1)(b)).

(2)

In this section “any relevant permissive rule in this Part” means any provision of this Part (apart from sections 291 to 294) which allows a deduction in calculating the profits of a property business.

(3)

In this section “any relevant prohibitive rule in this Part”, in relation to any deduction, means any provision of this Part (apart from sections F336, 38, 48 and 55, as applied by section 272 F4, or sections 38 and 55 as applied by section 272ZA F5, and apart also from F6sections 272A and 307D) which might otherwise be read as—

(a)

prohibiting the deduction, or

(b)

restricting the amount of the deduction.

F7(3A)

In this section “relevant tax avoidance arrangements” means arrangements—

(a)

to which the person carrying on the property business is a party, and

(b)

the main purpose, or one of the main purposes, of which is the obtaining of a tax advantage (within the meaning of section 1139 of CTA 2010).

“Arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).

(4)

In this section any reference to any provision of this Part includes any provision applied by section 272 F8or 272ZA.