A tax avoidance scheme involving post-cessation trade relief under Income Tax Act 2007 s 96, which provides relief for certain payments made or events occurring after a trade has ceased, is to be blocked with effect from 12 January.
Finance Bill 2012 will prevent relief being given where a qualifying payment or qualifying event arises from ‘arrangements entered into in which the main purpose, or one of the main purposes, is to obtain a tax reduction’, said David Gauke, the Exchequer Secretary.
According to a draft explanatory note, the government has become aware of avoidance activity that ‘relies on creating contrived costs’ in order to claim the relief, putting at risk ‘substantial amounts’ of tax.
A tax avoidance scheme involving post-cessation trade relief under Income Tax Act 2007 s 96, which provides relief for certain payments made or events occurring after a trade has ceased, is to be blocked with effect from 12 January.
Finance Bill 2012 will prevent relief being given where a qualifying payment or qualifying event arises from ‘arrangements entered into in which the main purpose, or one of the main purposes, is to obtain a tax reduction’, said David Gauke, the Exchequer Secretary.
According to a draft explanatory note, the government has become aware of avoidance activity that ‘relies on creating contrived costs’ in order to claim the relief, putting at risk ‘substantial amounts’ of tax.
