BIM90120 - Post-cessation receipts and expenses: post-cessation trade relief: targeted anti-avoidance provision
S98A ITA 2007
Anti-avoidance provision to counter schemes using post-cessation trade relief
This guidance relates to post-cessation expenses incurred by individuals, trustees, personal representatives and non-resident companies subject to Income Tax only.
The provisions in the legislation which allow certain post-cessation expenses to be relieved against total income and/or capital gains are very generous (see BIM90100 and BIM90130).
In response to a contrived and aggressive avoidance scheme that sought to generate post-cessation expenses that would then be relieved against total income or capital gains, a targeted anti-avoidance rule was introduced with effect from 12 January 2012 to block such schemes.
The targeted anti-avoidance rule prevents post-cessation trade relief being given where a 鈥榪ualifying payment鈥� (see BIM90110) or 鈥榪ualifying event鈥� (see BIM90115) arises directly or indirectly from 鈥榬elevant tax avoidance arrangements鈥� entered into in which the main purpose, or one of the main purposes, is to obtain a tax reduction.
鈥楻elevant tax avoidance arrangements鈥� are widely defined in S98A ITA 2007.