Capital Allowances Act 2001 Schedule 3 paragraph 23

Letting ships or aircraft to obtain old first-year allowance not a qualifying purpose

Schedule 3 paragraph 23 prevents the chartering of ships or aircraft from qualifying for favourable treatment under section 123 where the arrangement was designed to obtain a first-year allowance under transitional provisions.

• Section 123 normally allows ships or aircraft let on charter to be treated as used for a qualifying purpose, but this treatment is blocked where the chartering arrangement was motivated by obtaining an old first-year allowance.
• The anti-avoidance rule applies if the main object, or one of the main objects, of the charter letting itself was to secure such an allowance.
• The rule also catches wider arrangements: it applies where the charter formed part of a series of transactions and the main object of that series, or of any individual transaction within it, was to obtain the first-year allowance.
• The relevant first-year allowance is one arising from expenditure that qualified under the transitional provisions in paragraph 47 of Schedule 3, incurred by any person on providing the ship or aircraft.