Anti-avoidance: plant & machinery allowances

Following the summer consultation on reform of the anti-avoidance regime for plant and machinery allowances, the government published draft Finance Bill clauses replacing the old 'sole or main benefit' test with a new 'purpose test'.

Notwithstanding the stated intention that this test should catch only avoidance transactions, it appears to differ only marginally from the consultation document proposal while the impact of the legislation will now become much broader.

It will not be surprising if HMRC resorts to publishing detailed guidance in order to allay fears that the new regime might impact upon straightforward commercial investments and conventional tax planning.

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Lawyers Richard Carson

First published in Tax Journal dated 10th February 2012. Reproduced with permission.