Breaking: Treasury closes machinery tax avoidance scheme

A TAX AVOIDANCE scheme worth hundreds of millions of pounds involving plant and machinery has been discovered by the taxman.

In a written ministerial statement, exchequer secretary to the Treasury David Gauke said legislation effective from today will attempt to stamp out a scheme involving the sale and leaseback of plant and machinery purely to benefit from tax relief.

"By acting immediately, the Government is seeking to protect the Exchequer and maintain fairness in the tax system," said Gauke in the statement.

Large businesses have entered into "contrived" transactions where plant and machinery is sold, leased back, then reacquired over a period of several weeks. The capital allowances on the leaseback are claimed twice on one amount of expenditure.

The scheme has involved an estimated £1bn of expenditure, "putting hundreds of millions of pounds of tax at risk".