|
Capital Allowances |
45 |
charge and P would get no allowance at all. The sharp contrasts for both parties—between a disposal after 24 years and 364 days and one 3 days later—are striking; whether they are sensible is a very different matter.422 |
The balancing allowance anti—avoidance FA 2003 inserts CAA 2001 section 570A. See generally Inland Revenue Press Release Rev BN 14 9 April 2003,Simons Tax Intelligence 2003, p 719. |
| This section applies to any balancing events on or after 27 November 2003. It bars any balancing allowance where, as a result of a tax avoidance scheme, the amount to be brought into account as the proceeds of the event are less that it would otherwise have been subs (2). Moreover to make matters worse for the avoider or, more immediately the person buying from the avoider, the residue of any qualifying expenditure immediately after the balancing event is calculated as if the allowance had actually been made (subs (4)). The scheme is a tax avoidance scheme if the main purpose or one of the main purposes is the obtaining of a tax advantage by the taxpayer (subs (3)). This provision applies not only to the allowance for industrial buildings in part 3 of the Act but also to those for Agricultural Land (§24.4). Flat Conversions (§24.4A) mineral extraction §24.5 and Assured Tenancies §24.10. |
24A.3.6.5 Minor Matters |
| The residue of expenditure is calculated by taking account of any reliefs that could have been claimed, but were not because the relevant interest was held by the Crown or by an exempt person.423 |
On a sale between connected persons who elect for the building to be transferred at its written down value, the residue of expenditure is carried through to the purchaser, save where there is a tax avoidance motive, in which case market value is taken.424 |
24A.3.6.6 Building not Land: Artificial Arrangements |
Special rules clarify the sum paid on the sale of a relevant interest if there are arrangements artificially to enhance the value of the relevant interest.425 Since the allowance is intended to cover the element of the price paid for the building, the value of the land must be deducted, and any value attributable to elements over and above those which would feature in a normal commercial lease must be negotiated in the open market. This is achieved by describing any of the elements as arrangements having an artificial effect on pricing, and then directing that the amount of the price paid which is attributable to such arrangements be not allowed. |
24A.3.7 Other Buildings |
24A.3.7.1 Qualifying Hotel Buildings and Extensions |
| Hotels do not qualify for the general industrial buildings allowances since they do not come within the list of trades permitted. However, an annual writing down allowance of 4% is available, calculated on a straight line basis.426 Subsequent holders of the relevant interest |