Part 9

Leasing plant or machinery
Chapter 3

Sales of lessors: leasing business carried on by a company alone

Election out of qualifying change of ownership

Restriction on artificial losses or reductions in profits
398E
1
This section applies if any expenditure incurred by A in carrying on the relevant activity has an unallowable purpose.
2
In calculating the profits or losses of A for any accounting period for the purposes of corporation tax so much of the expenditure as, on a just and reasonable apportionment, is attributable to the unallowable purpose is to be left out of account.
3
Expenditure has an unallowable purpose if the main purpose, or one of the main purposes, of A in incurring it is to obtain a relevant tax advantage (“the unallowable purpose”).
4
A “relevant tax advantage” is—
a
a reduction in the profits which, for the purposes of corporation tax, are attributable to the carrying on of the relevant activity by A,
b
the creation of a loss which, for those purposes, is so attributable, or
c
an increase in losses which, for those purposes, are so attributable.
Ss. 398A-398G and cross-heading inserted (with effect in accordance with Sch. 18 para. 9 of the amending Act) by Finance Act 2010 (c. 13), Sch. 18 para. 6 (with Sch. 18 paras. 11-13)