IBA: miscellaneous: arrangements having an artificial effect on pricing: legislation
Budget 2007 announced a business tax reform package including the gradual withdrawal of IBAs and ABAs over four years. Legislation was introduced in FA08 to give effect to those changes. The phased withdrawal of IBA writing down allowances had effect for chargeable periods ending on or after 1 April 2008 for businesses within the charge to CT and 6 April 2008 for businesses within the charge to IT. There are no IBA writing down allowances for the financial year beginning on 1 April 2011 and subsequent years.
The legislation applies where the qualifying expenditure is the price paid on the sale of the relevant interest in a building and arrangements having an artificial effect on pricing were entered into at or before the time when the sale price is fixed.
The qualifying expenditure is reduced to what it would have been if the arrangements had not existed. Do that by making a just apportionment of the purchase price.
The arrangements caught are those made between two or more persons that enhance the value of the relevant interest.
If you want to apply the legislation you must submit the file to CTIAA (Technical) once the basic facts have been established, but before any challenge is made. You will need to have obtained copies of all relevant documentation and contracts before you make your submission.