Citing the reason behind the sudden decision, the UK Treasury said that the scheme involved artificial transactions to generate tax relief from a property business that owns agricultural land.
However the transactions were not part of any genuine agricultural business, the UK Treasury in a statement said.
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To close this scheme and protect the Exchequer from significant losses, the UK Government is introducing legislation in Finance Bill 2012 to prevent property business loss relief arising from tax motivated arrangements.
David Gauke, exchequer secretary to the Treasury, remarked: "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," Gauke added.
This is the third avoidance scheme to target trading and property reliefs in recent months. Last month, the UK government legislated against two "aggressive" tax avoidance schemes used by Barclays Bank.
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By GlobalDataThe move will give added momentum to a proposal for a general anti-avoidance rule (GAAR) expected in the upcoming budget to be presented by Chancellor George Osborne next week.
In November last year, a report by Graham Aaronson QC recommended a "narrowly focussed" GAAR, which he said would deter "abusive" tax avoidance and reduce legal uncertainty surrounding schemes.
The GAAR would explain what types of avoidance schemes are "abusive" and covered by the rule. If HMRC can show that an avoidance scheme is covered by the GAAR it would, in theory, make tax disputes quicker to resolve, particularly if they go to court.
