Section 165E | Transaction to obtain tax advantage ^F1

From legislation.gov.uk

(1)Allowances under this Part are restricted under subsection (5) if—^F1

(a)a person (“R”) who is carrying on, or has ceased to carry on, a ring fence trade enters into a transaction with another person (“S”),^F1

(b)S receives from R consideration for services provided in pursuance of the transaction,^F1

(c)all or part of that consideration is decommissioning expenditure, and^F1

(d)the transaction either has an avoidance purpose, or is part of, or occurs as a result of, a scheme or arrangement that has an avoidance purpose.^F1

(2)Subsection (1)(d) may be satisfied—^F1

(a)whether the scheme or arrangement was made before or after the transaction was entered into, and^F1

(b)whether or not the scheme or arrangement is legally enforceable.^F1

(3)A transaction, scheme or arrangement has an “avoidance purpose” if the main purpose, or one of the main purposes, of a party in—^F1

(a)entering into the transaction, scheme or arrangement, or^F1

(b)agreeing an amount of consideration, or a method of determining an amount of consideration, to be paid in pursuance of the transaction, scheme or arrangement,^F1

is to enable a person to obtain a tax advantage under this Part that would not otherwise be obtained.

(4)The reference in subsection (3) to obtaining a tax advantage that would not otherwise be obtained includes obtaining an allowance that is in any way more favourable to a person than the one that would otherwise be obtained.^F1

(5)All or part of R's expenditure under the transaction is to be left out of account in determining R's available qualifying expenditure.^F1

(6)The amount of expenditure to be left out of account is—^F1

(a)such amount as would or would in effect cancel out the tax advantage mentioned in subsection (3) (whether that advantage is obtained by R or another person and whether it relates to the transaction or something else), or^F1

(b)if the amount found under paragraph (a) exceeds the whole of R's expenditure under the transaction, the whole of that expenditure.^F1