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Volume 593: debated on Thursday 26 February 2015

The Government are committed to tackling tax avoidance to ensure the Exchequer is protected and fairness is maintained for the taxpayer.

HMRC has become aware of a proposed transaction that seeks to take advantage of a perceived gap in the sale and leaseback rules for capital allowances. The claimed effect of the transaction is to create tens of millions of pounds of capital allowances in respect of assets where no real expenditure has been incurred. The Government do not accept that these arrangements would have this effect, but we will put this beyond doubt by taking action today.

I am today announcing that legislation will be introduced in the Finance Bill 2015 to ensure that where an asset is acquired without incurring expenditure, an entitlement to capital allowances cannot be created by a sale and leaseback or connected party transaction. The legislation will have effect from today and will protect significant amounts of revenue.

We have acted quickly to prevent any exploitation of these rules. This Government will not hesitate to eliminate opportunities for avoidance that create significant risk to the Exchequer.

Draft legislation and further details of this measure are being published on HMRC’s website today.