BLM01030 | Introduction: anti-avoidance rules: capital allowances

This manual is being updated to reflect FRS 102 (2024 amendments). For guidance on the tax treatment of accounts prepared under IFRS 16 or the revised FRS 102, please refer to pages within the BLM50000 chapter.

Chapter 17 of CAA2001 contains a number of anti-avoidance rules that deter exploitation of plant or machinery allowances. They cover

• transactions between connected persons

• transactions where the sole or main benefit is to obtain plant or machinery allowances

• sale and leaseback

• restriction of a lessor’s capital allowances where the assets are used for finance leasing

• sale and finance leaseback

• lease and finance leaseback

• leases where there are arrangements in place the reduce the lessor’s risk from non-payment of rentals by the lessee (known as defeasance)

• sale of assets without the income stream.

Guidance is at CA28000 and CA28900 onwards.