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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15940
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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The government has just abolished the 10% of rental income

Resolved Question:

The government has just abolished the 10% of rental income as a Wear & tear expense.
I have several properties that I furnished at the outset and have been using this allowance for many years, replacing items as the need arose. However, just before the announcement I replaced several significant items only to find I would not be getting the allowance in the following years or the cost as an expense last year.
What is to stop me selling all my contents ( including the new items) to a nominal individual just before the end of the last tax year the 10% was allowed and buying them back at the start of the next and claiming the purchase cost (of the contents) as an expence under the new legislation?
SA
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. In theory, there is nothing to stop you doing that. Whilst HMRC are unlikely ever to find out if you do, if they do, they might disallow it on the basis that they may class it as aggressive tax avoidance. The purpose of the disposal and repurchase would be to get the tax relief and that HMRC would have a problem with if they found out. I hope this helps but let me know if you have any further questions.
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