Income Tax Act 2007 section 98A

Denial of relief for tax-generated payments or events

Section 98A denies post-cessation trade relief where the payment or event giving rise to the claim arises from arrangements whose main purpose, or one of whose main purposes, is to obtain a tax advantage through that relief.

• Post-cessation trade relief is blocked where a payment or event is connected to tax avoidance arrangements designed to exploit that relief
• The denial also extends to claims under section 261D of TCGA 1992, which allows excess post-cessation relief to be treated as a capital gains tax loss
• Tax avoidance arrangements are defined broadly to include any agreement, understanding, scheme, transaction or series of transactions, whether or not legally enforceable
• The rule applies where the person claiming relief is a party to the arrangements and a main purpose is to reduce tax liability through post-cessation trade relief