Capital Allowances Act 2001 section 357

Arrangements having an artificial effect on pricing

Section 357 counteracts arrangements that artificially inflate the price at which a relevant interest in a building is sold, ensuring that capital allowances are calculated on a realistic market value rather than an inflated one.

• Where a relevant interest in a building is sold and related arrangements have artificially enhanced the sale price, the price used for calculating qualifying expenditure is reduced to what it would have been without the artificial element.
• Where qualifying expenditure already reflects an artificially inflated sale price, the proceeds of any subsequent balancing event are similarly reduced to strip out the artificial element.
• Arrangements are considered to have an artificial effect on pricing to the extent they go beyond what would reasonably be expected in comparable arm's length transactions under prevailing market conditions.
• "Related arrangements" covers any arrangements between two or more persons concerning an interest in or right over the building, regardless of who grants that interest or right.