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HMRC internal manual

Capital Allowances Manual

PMA: FYA: First-year tax credits: artificially inflated claims

CAA01/Sch.A1 para 28

There is anti-avoidance legislation intended to prevent a company making an artificially inflated claim for first-year tax credits. If a transaction is attributable to arrangements entered into wholly or mainly for a disqualifying purpose, disregard it when you work out the first-year credit to which a company is entitled.

Arrangements are entered into for a disqualifying purpose if their main object, or one of their main objects, is to let a company get a first-year tax credit

  1. to which it would not otherwise be entitled, or
  2. which is larger than the one to which it would otherwise be entitled.


“Arrangements” include any scheme, agreement or understanding, whether or not legally enforceable.