Energy (Oil and Gas) Profits Levy Act 2022 section 5

Meaning of "disqualifying purposes"

Section 5 is an anti-avoidance rule that prevents expenditure from qualifying for the enhanced investment allowance under section 2 where the expenditure is connected with tax avoidance arrangements.

• Expenditure is disqualified from the investment allowance if it arises directly or indirectly from avoidance arrangements designed to secure a levy advantage.
• Arrangements are treated as avoidance arrangements where one of their main purposes is to gain a levy advantage and they are contrived, abnormal, lack genuine commercial purpose, or circumvent the intended limits of the relief.
• A "relevant levy advantage" covers a broad range of outcomes including obtaining relief, reducing or deferring levy charges, accelerating repayments, and avoiding obligations to account for the levy.
• The term "arrangements" is defined very widely to include any transaction, series of transactions, scheme, or arrangement, regardless of whether it is legally enforceable.