Finance Act 2013

Section 71

SCHEDULE 26Restrictions on buying capital allowances

Introductory

1Chapter 16A of Part 2 of CAA 2001 (avoidance involving allowance buying) is amended as follows.

Restrictions where certain conditions met

2(1)Section 212B (circumstances where Chapter 16A applies) is amended as follows.

(2)For subsection (1)(d) substitute—

“(d)the qualifying change meets one of the limiting conditions.”

(3)For subsection (4) substitute—

“(4)Sections 212LA and 212M set out the limiting conditions and specify when those conditions are met.”

3After section 212L insert—

“Limiting conditions

212LALimiting conditions

(1)The qualifying change meets one of the limiting conditions if condition A, B, C or D is met.

(2)Condition A is that the amount of the relevant excess of allowances is £50 million or more.

(3)Condition B is that the amount of the relevant excess of allowances—

(a)is £2 million or more but less than £50 million, and

(b)is not insignificant as a proportion of the total amount or value of the benefits derived by any relevant person by virtue of the qualifying change or change arrangements.

(4)“Relevant person” means a person who, at the end of the relevant day, is—

(a)a principal company of C,

(b)a person carrying on the relevant activity in partnership, or

(c)a person who is connected to a person within paragraph (a) or (b) (within the meaning of section 1122 of CTA 2010).

(5)Condition C is that—

(a)the amount of the relevant excess of allowances is less than £2 million, and

(b)the qualifying change has an unallowable purpose.

See section 212M for the meaning of “unallowable purpose”.

(6)Condition D is that the main purpose, or one of the main purposes, of any arrangements is to procure that condition A or B or paragraph (a) of condition C is not met.

(7)In this section—

• the amount of the relevant excess of allowances is the difference between RTWDV and BSV (see sections 212K and 212L);

• “change arrangements” and “arrangements” have the same meaning as in section 212M.”

4In consequence of the amendments made by paragraphs 2 and 3, the heading to Chapter 16A becomes “Restrictions on allowance buying”.

Extension of restrictions to other qualifying activities

5(1)Section 212B (circumstances where Chapter 16A applies) is amended as follows.

(2)In subsection (1)—

(a)in paragraph (a), for “a trade (“the relevant trade”)” substitute “a qualifying activity (“the relevant activity”)”, and

(b)in paragraph (c), for “trade” (in both places) substitute “activity”.

(3)In subsection (3) for “trade” substitute “activity”.

6(1)Section 212C (when there is a a qualifying change in relation to C) is amended as follows.

(2)In subsection (4)—

(a)after “Condition C is that” insert “the relevant activity is a trade (within the meaning of this Part) and”, and

(b)for “trade”, where it appears after “the relevant” (in both places), substitute “activity”.

(3)In subsection (5) for “trade” (in both places) substitute “activity”.

7(1)Section 212I (relevant percentage share) is amended as follows.

(2)In subsections (1) and (3) for “trade” substitute “activity”.

(3)In subsection (2) for “a trade” substitute “an activity”.

8In section 212J(1) (relevant excess of allowances) for “trade” substitute “activity”.

9In section 212K(2), (3), (4) and (5) (relevant tax written-down value) for “trade” substitute “activity”.

10In section 212N(2), (3) and (4) (old and new accounting periods) for “trade” substitute “activity”.

11(1)Section 212P (effect of excess on pools) is amended as follows.

(2)In subsection (3)—

(a)for “a trade (or part of a trade)” substitute “a qualifying activity (or part of a qualifying activity)”,

(b)for “the activities of that trade (or part of a trade)” substitute “that activity (or that part of an activity)”,

(c)after “its trade” insert “or business”,

(d)for “those activities” substitute “that activity (or that part)”, and

(e)after “separate trade” insert “or business”.

(3)In subsection (4)—

(a)after “section 37” insert “, 62 or 66”,

(b)omit “trade”,

(c)for “earlier” substitute “other”, and

(d)after “period)” insert “or section 259 or 260(3) of this Act (special leasing)”.

12(1)Section 212Q (when there are postponed capital allowances) is amended as follows.

(2)In subsection (3)—

(a)for “a trade (or part of a trade)” substitute “a qualifying activity (or part of a qualifying activity)”,

(b)for “the activities of that trade (or part of a trade)” substitute “that activity (or that part of an activity)”,

(c)after “its trade” insert “or business”,

(d)for “those activities” substitute “that activity (or that part)”, and

(e)after “separate trade” insert “or business”.

(3)In subsection (4)—

(a)after “section 37” insert “, 62 or 66”, and

(b)after “CTA 2010” insert “or section 259 or 260(3) of this Act”.

Commencement

13(1)The amendments made by this Schedule have effect in relation to a qualifying change if the relevant day (within the meaning of Chapter 16A of Part 2 of CAA 2001) is on or after 20 March 2013.

(2)But those amendments do not have effect if before that date—

(a)the arrangements made to bring about the qualifying change were entered into, or

(b)there was an agreement, or common understanding, between the parties to those arrangements as to the principal terms on which the qualifying change would be brought about.