Section 78 — Income Tax Act 2007: First-year allowances and annual investment allowances : arrangements to reduce tax liabilities

First-year allowances and annual investment allowances : arrangements to reduce tax liabilities 78 1 This section applies if—

a the annual investment allowance or first-year allowance is made in connection with a relevant qualifying activity or a relevant asset (see subsections (2) and (3)),

and b arrangements within subsection (4) have been made.

2 A qualifying activity is a relevant one if—

a at the time when the expenditure was incurred, the activity was carried on by the individual as a partner in a firm, or b at a later time, it has been carried on by the individual as a partner in a firm or transferred to a person connected with the individual.

3 An asset is a relevant one if, after the time when the expenditure was incurred, the asset was transferred by the individual—

a to a person connected with the individual, or b to a person at a price lower than its market value.

4 Arrangements are within this subsection if as a result of them—

a the sole benefit, or b the main benefit, that might be expected to arise to the individual from the transaction under which the expenditure was incurred is the obtaining of a reduction in tax liability by means of sideways relief.

5 It does not matter when the arrangements were made.

6 References to making arrangements include effecting schemes.