.png)
.png)
The government is to clampdown on post-cessation trade relief being given where a qualifying payment or qualifying event arises from arrangements of which the main purpose, or one of the main purposes, is to obtain a tax reduction.
The move comes after HMRC became aware of a tax avoidance scheme that seeks to generate post-cessation trade relief for set-off by users against their other income or capital gains.
Ordinarily, a person who incurs certain costs or bad debts directly related to a trade, profession or vocation that has ceased may legitimately claim relief against other income and capital gains.
Officials noted avoidance activity that relies on creating contrived costs to claim post-cessation trade relief, putting at risk substantial amounts of tax. The government does not accept that the arrangements have the effect sought.
Legislation is to be introduced in this year's Finance Bill, and will have effect from 12 January 2012.
The Revenue was unable to provide further details of the scheme, other than suggest offshore tax havens are be involved.
