Although the land itself and the business owning it will exist, the transactions are not part of any genuine agricultural business. They are generated only to create an artificial loss that can be set off by users of the scheme against their other income to reduce their tax bill.
To close this scheme and protect the Exchequer from significant losses, the Government is introducing legislation in Finance Bill 2012 to prevent property business loss relief arising from tax motivated arrangements. The legislation came into effect yesterday.
This is the third contrived and aggressive avoidance scheme that HM Revenue & Customs has become aware of recently that has tried to target trading and property reliefs, and the Government recognises that further similar schemes may emerge. It is therefore introducing legislation in the Finance Bill 2012 to prevent post cessation property relief being used artificially to avoid tax. This legislation also came into effect yesterday.
David Gauke, Exchequer Secretary to the Treasury, said: "At a time when our top economic priority is reducing the deficit, it is unacceptable for anyone to try to avoid paying a fair share. Today’s action will not affect legitimate agricultural businesses, but by acting swiftly, the Government has prevented this scheme being used by people who want to escape paying the tax they owe. We won’t hesitate to close other avoidance schemes down as we become aware of them."
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