Corporation Tax Act 2010 section 435

Disregard of increases and decreases in certain amounts

Section 435 is an anti-avoidance rule that prevents companies from manipulating key figures used to determine whether the plant or machinery leasing restrictions in Chapters 3 and 4 apply to them.

• Where arrangements artificially increase or decrease amounts relevant to the plant or machinery leasing rules (such as asset values, income, tax written-down values, or disposal values), and a main purpose is to obtain a tax advantage, those changes must be ignored.
• A "relevant tax advantage" includes avoiding being classified as carrying on a leasing business, reducing deemed income, increasing deemed expenses, or reducing a substituted disposal value under the leasing provisions.
• "Arrangements" is defined very broadly to cover any agreement, understanding, scheme or transaction, whether or not legally enforceable, and whether or not the company benefiting is a party to them.
• "Increase" includes an increase from nil, and "reduction" includes a reduction to nil, so even the creation or complete elimination of an amount is caught by this rule.