An ‘aggressive’ tax avoidance scheme putting ‘hundreds of millions of pounds’ of tax at risk was blocked with effect from 9 March in response to a disclosure made to HMRC under the scheme disclosure regulations.
An ‘aggressive’ tax avoidance scheme putting ‘hundreds of millions of pounds’ of tax at risk was blocked with effect from 9 March in response to a disclosure made to HMRC under the scheme disclosure regulations.
David Gauke, the Exchequer Secretary to the Treasury, told MPs that the scheme had been widely marketed. Some large businesses had entered into ‘contrived, circular transactions involving the sale, leaseback, and reacquisition of their plant and machinery, over a period of three or four weeks, with the aim of claiming tax relief twice on one amount of expenditure’.
A lessee under a plant or machinery long funding lease can claim capital allowances. ‘To date instances of the scheme that HMRC are aware of have involved expenditure in excess of £1 billion,’ Gauke said.
HMRC have published draft legislation and a note of the technical background to the measure. The legislation, to be included in Finance Bill 2011, will apply to ‘payment of a guarantee of residual value for long funding leases which, it is claimed, gives rise to tax relief for up to twice the amount of the payment’.
A Tax Information and Impact Note is also available. The changes to CAA 2001 are intended to put ‘beyond doubt’ that the lessee is entitled to relief only once.
They will apply to new arrangements relating to guarantees entered into on or after 9 March 2011, and to existing arrangements where payment under a guarantee was not made before 9 March.
An ‘aggressive’ tax avoidance scheme putting ‘hundreds of millions of pounds’ of tax at risk was blocked with effect from 9 March in response to a disclosure made to HMRC under the scheme disclosure regulations.
An ‘aggressive’ tax avoidance scheme putting ‘hundreds of millions of pounds’ of tax at risk was blocked with effect from 9 March in response to a disclosure made to HMRC under the scheme disclosure regulations.
David Gauke, the Exchequer Secretary to the Treasury, told MPs that the scheme had been widely marketed. Some large businesses had entered into ‘contrived, circular transactions involving the sale, leaseback, and reacquisition of their plant and machinery, over a period of three or four weeks, with the aim of claiming tax relief twice on one amount of expenditure’.
A lessee under a plant or machinery long funding lease can claim capital allowances. ‘To date instances of the scheme that HMRC are aware of have involved expenditure in excess of £1 billion,’ Gauke said.
HMRC have published draft legislation and a note of the technical background to the measure. The legislation, to be included in Finance Bill 2011, will apply to ‘payment of a guarantee of residual value for long funding leases which, it is claimed, gives rise to tax relief for up to twice the amount of the payment’.
A Tax Information and Impact Note is also available. The changes to CAA 2001 are intended to put ‘beyond doubt’ that the lessee is entitled to relief only once.
They will apply to new arrangements relating to guarantees entered into on or after 9 March 2011, and to existing arrangements where payment under a guarantee was not made before 9 March.
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