Corporation Tax Act 2010 section 432

Restrictions on relief for Chapter 3 or 4 expenses: introduction

Section 432 sets out the conditions under which anti-avoidance restrictions apply to losses arising from expenses incurred under the plant and machinery leasing rules in Chapters 3 or 4, where those expenses result from arrangements designed to generate them.

• Where a company incurs an expense under Chapter 3 or 4 that arises from arrangements whose main purpose (or one of the main purposes) is to secure that expense, and the company makes a loss deriving from it, restrictions under sections 433 and 433A apply
• The restrictions apply only to the portion of the loss that derives from the expense, known as "the restricted loss amount"
• To work out how much of a loss derives from the expense, you treat the expense as the final amount to be deducted in the loss calculation
• "Arrangements" is defined very broadly to include any agreement, understanding, scheme, transaction or series of transactions, whether or not legally enforceable and whether or not the company is a party to them