Plant and Machinery – Anti-Avoidance
The Government has published draft legislation to tackle an ‘aggressive’ tax avoidance scheme involving the leasing of plant or machinery by some large businesses seeking to avoid tax. The legislation to be included in the 2011 Finance Bill will be effective from the date the announcement was made, 9 March 2011.
HMRC have become aware of a scheme whereby some large businesses have entered into contrived, circular transactions involving the sale, leaseback, and reacquisition of their plant and machinery, over a period of three or four weeks. These arrangements have the aim of claiming tax relief twice on one amount of expenditure. HMRC have said that this scheme puts hundreds of millions of pounds of tax at risk.
The new legislation is not expected to impact on regular commercial leasing arrangements but will seek to ensure that it is not possible to claim a double tax relief for certain expenditure.