Part 9Leasing plant or machinery

Chapter 5Sales of lessors: anti-avoidance provisions

435Disregard of increases and decreases F2in certain amounts

1

This section applies if—

F3a

an amount mentioned in subsection (1A) is to be ascertained for the purpose of determining a question as to the application of Chapter 3 or 4,

b

apart from this section, there would be a reduction or increase in any such amount,

c

the reduction or increase arises directly or indirectly in consequence of, or otherwise in connection with, any arrangements, and

d

the main purpose, or one of the main purposes, of the arrangements is to secure that there is a relevant tax advantage.

F11A

The amounts are—

a

the relevant plant or machinery value,

b

the value of plant or machinery falling within section 387(7) or 410(6),

c

the relevant company's or partnership's income in the period of 12 months ending with the relevant day,

d

the amount of PM,

e

the amount of TWDV,

f

the amount of any disposal value to be substituted by section 398G(3), and

g

any underlying amount required to calculate or verify an amount mentioned in any of the preceding paragraphs.

2

There is a relevant tax advantage if (apart from this section)—

a

any company would not be regarded for the purposes of any provision of Chapter 3 or 4 as carrying on a business of leasing plant or machinery (whether alone or in partnership),

b

the amount of any income which any company is treated as receiving under any such provision would be reduced, F4...

c

the amount of any expense which any company is treated as incurring under any such provision would be increased F5, or

d

the amount of any disposal value to be substituted by section 398G(3) would be reduced.

3

For the purpose of determining the question as to the application of Chapter 3 or 4, the reduction or increase in the amount F6to be ascertained must be ignored.

4

In this section—

  • “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions—

    1. a

      whether or not legally enforceable, and

    2. b

      whether or not the company for which the relevant tax advantage is intended to be secured is a party to the arrangements,

  • “increase” includes an increase from nil, and

  • “reduction” includes a reduction to nil.