215Transactions to obtain tax advantages

1

Allowances under this Part are restricted under the applicable sections if B enters into a relevant transaction with S that either—

a

has an avoidance purpose, or

b

is part of, or occurs as a result of, a scheme or arrangement that has an avoidance purpose.

2

Subsection (1)(b) may be satisfied—

a

whether the scheme or arrangement was made before or after the relevant transaction was entered into, and

b

whether or not the scheme or arrangement is legally enforceable.

3

A transaction, scheme or arrangement has an “avoidance purpose” if the main purpose, or one of the main purposes, of a party in entering into the transaction, scheme or arrangement 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.

5

If the tax advantage is of a kind described in subsection (7), “the applicable sections” are sections 217 and 218ZA(5).

6

Otherwise, “the applicable sections” are sections 217 and 218ZA(1) or, as the case may be, 218ZA(3).

7

The kinds of tax advantage are—

a

that an allowance to which B is entitled for a chargeable period is calculated using a percentage rate that is higher than the one that would otherwise be used, or

b

that B is entitled to an allowance in respect of an amount of capital expenditure sooner than B would otherwise be entitled to it.

8

If a transaction, scheme or arrangement involves—

a

a tax advantage of a kind described in subsection (7), and

b

a tax advantage not of such a kind,

subsections (5) and (6) have effect separately in relation to each tax advantage.

218ZARestrictions on writing-down allowances: section 215

1

If this subsection applies as a result of section 215, all or part of B's expenditure under the relevant transaction is to be left out of account in determining B's available qualifying expenditure.

2

The amount of expenditure to be left out of account is—

a

such amount as would or would in effect cancel out the tax advantage mentioned in section 215 (whether that advantage is obtained by B or another person and whether it relates to the relevant transaction or something else), or

b

if the amount found under paragraph (a) exceeds the whole of B's expenditure under the relevant transaction, the whole of that expenditure.

3

But if subsection (1) applies as a result of section 215 and—

a

section 218 also applies as a result of section 214 or 216, or

b

section 228 also applies by virtue of an election under section 70I(11) or 227,

the amount of expenditure to be left out of account is the greater of X and Y.

4

For the purposes of subsection (3)—

• “X” is the amount found under subsection (2), and

• “Y” is the amount by which B's expenditure under the relevant transaction exceeds D (as defined in section 218 or, as the case may be, section 228).

5

If this subsection applies as a result of section 215—

a

the allowance mentioned in subsection (7)(a) of that section is to be calculated using the rate that would be used without the tax advantage, or (as the case may be)

b

the entitlement mentioned in subsection (7)(b) of that section is to be available as and when it would be available without the tax advantage.

6

Subsection (5) applies whether or not section 218 also applies as a result of section 214 or 216, or section 228 also applies by virtue of an election under section 70I(11) or 227.

268EMeaning of “assigns”

1

For the purposes of this Part—

a

a person (“A”) is taken to assign the benefit of a contract, or rights under a contract, to another person (“B”) whenever B becomes entitled, and A ceases to be entitled, to the benefit or rights (whether by assignment, novation, variation or replacement of the contract, by operation of law or otherwise), and

b

references to an assignment are to be read accordingly.

2

Any reference in this Part to the benefit of a contract or to rights under a contract includes a reference to part of the benefit of a contract or to part of the rights under a contract.