Background
14.Section 34 is one of two preventing loss buying.
15.Chapter 16A of Part 2 CAA 2001 was introduced in Finance Act 2010 in order to prevent tax-motivated capital allowance buying. Chapter 16A applies to situations where a company in a group decided not to claim all the allowances to which it was entitled and that company is then subject to a qualifying change.
16.Chapter 16A applies where there is a company C and
the tax written down value (TWDV) of the company’s plant or machinery assets exceeds the balance sheet value (BSV) of those assets. This excess is the relevant excess of allowances.
there is a “qualifying change of ownership” in relation to C; and in certain circumstances where the qualifying change has an “unallowable purpose”.
17.Prior to this amendment Chapter 16A applied to restrict claims to trading lossess either by set off in year by carry back or by group relief where there is a qualifying change with an unallowable purpose as one where the main purpose or one of the main purposes of the change arrangements is to obtain a tax advantage for any person.
