Part 4 U.K.Loss relief

Chapter 2 U.K.Trade losses

Restrictions on sideways relief for certain capital allowances U.K.

78 First-year allowances [F1 and annual investment allowances]: arrangements to reduce tax liabilities U.K.

(1) This section applies if—

(a) the [F2 annual investment allowance or] first-year allowance is made in connection with a relevant qualifying activity or a relevant asset (see subsections (2) and (3)), and

(b) arrangements within subsection (4) have been made.

(2) A qualifying activity is a relevant one if—

(a) at the time when the expenditure was incurred, the activity was carried on by the individual as a partner in a firm, or

(b) at a later time, it has been carried on by the individual as a partner in a firm or transferred to a person connected with the individual.

(3) An asset is a relevant one if, after the time when the expenditure was incurred, the asset was transferred by the individual—

(a) to a person connected with the individual, or

(b) to a person at a price lower than its market value.

(4) Arrangements are within this subsection if as a result of them—

(a) the sole benefit, or

(b) the main benefit,

that might be expected to arise to the individual from the transaction under which the expenditure was incurred is the obtaining of a reduction in tax liability by means of sideways relief.

(5) It does not matter when the arrangements were made.

(6) References to making arrangements include effecting schemes.

Textual Amendments

F1 Words in s. 78 heading inserted (21.7.2008 with effect in accordance with Sch. 24 para. 23 of the amending Act) by Finance Act 2008 (c. 9), Sch. 24 para. 22(b)

F2 Words in s. 78(1)(a) inserted (21.7.2008 with effect in accordance with Sch. 24 para. 23 of the amending Act) by Finance Act 2008 (c. 9), Sch. 24 para. 22(a)

Modifications etc. (not altering text)

C1 Ss. 75-79 applied (21.7.2009) by Finance Act 2009 (c. 10), Sch. 6 para. 1(11)(c)

C2 Ss. 75-79 applied (10.6.2021) by Finance Act 2021 (c. 26), Sch. 2 para. 3(1)(d)