|
| |
|
(a) | if subsection (1)(a) applies, as income for the period of |
| |
account in which there is first an obligation of the kind |
| |
| |
(b) | if subsection (1)(b) applies, as income for the period of |
| |
account in which the payment is made. |
| |
809ZB | Section 809ZA: interpretation |
| |
(1) | The expressions used in section 809ZA and this section are to be |
| |
| |
(2) | “Capital payment” means any payment except one which, if made to |
| |
| |
(a) | would fall to be included in a calculation of the lessor’s |
| |
income for income tax purposes, or |
| |
(b) | would fall to be included in such a calculation but for section |
| |
148A of ITTOIA 2005 (rental earnings under long funding |
| |
| |
| |
| |
(b) | the letting of a ship or aircraft on charter or the letting of any |
| |
| |
| and “lessor” and “lessee” are to be read accordingly. |
| |
(4) | “Lease of plant or machinery” includes a lease of plant or machinery |
| |
and other property but does not include— |
| |
(a) | a lease where the income attributable to the lease received by |
| |
the lessor (if any) would be chargeable to tax under Part 3 of |
| |
ITTOIA 2005 (property income), or |
| |
(b) | a lease of plant or machinery where the lessor has incurred |
| |
what would (but for section 34A of CAA 2001) be qualifying |
| |
expenditure (within the meaning of Part 2 of that Act) on the |
| |
| |
(5) | “Relevant arrangement” means any agreement or arrangement |
| |
relating to a lease of plant or machinery, including one made before |
| |
the lease is entered into or after it has ended (and, accordingly, |
| |
“lessor” and lessee” include prospective and former lessors and |
| |
| |
(6) | A capital payment, in relation to a lease or relevant arrangement, is |
| |
“relevant” if condition A or B is met (but this is subject to subsection |
| |
| |
(7) | Condition A is that the capital payment is payable (or paid), directly |
| |
or indirectly, by (or on behalf of) the lessee to (or on behalf of) the |
| |
lessor in connection with— |
| |
(a) | the grant, assignment, novation or termination of the lease, or |
| |
(b) | any provision of the lease or relevant arrangement (including |
| |
the variation or waiver of any such provision). |
| |
(8) | Condition B is that rentals payable under the lease are less than (or |
| |
payable later than) they might reasonably be expected to be if there |
| |
were no obligation to make the capital payment (and the capital |
| |
| |
|
| |
|
| |
|
(9) | A capital payment is not “relevant” if or to the extent that— |
| |
(a) | the capital payment reduces (or would but for section 536 of |
| |
CAA 2001 reduce) the amount of expenditure incurred by the |
| |
lessor for the purposes of CAA 2001 in respect of the plant or |
| |
| |
(b) | the capital payment is compensation for loss resulting from |
| |
damage to, or damage caused by, the plant or machinery in |
| |
| |
(c) | the capital payment would fall (or falls) to be brought into |
| |
account by the lessor as a disposal receipt within the meaning |
| |
of Part 2 of CAA 2001 (see section 60(1) of that Act). |
| |
(10) | References to payment include the provision of value by any means |
| |
other than the making of a payment, and accordingly— |
| |
(a) | references to the making of a payment include the passing of |
| |
value (by any other means), and |
| |
(b) | references to the amount of the payment include the value |
| |
| |
809ZC | Section 809ZA: lease of plant and machinery and other property |
| |
(1) | This section applies if section 809ZA applies in relation to a lease of |
| |
plant or machinery and other property (see section 809ZB(4)). |
| |
(2) | The relevant capital payment is to be apportioned, on a just and |
| |
reasonable basis, between— |
| |
(a) | the plant and machinery, and |
| |
| |
(3) | If the income (if any) received by the lessor that is attributable to any |
| |
of the plant or machinery is chargeable to tax under Part 3 of ITTOIA |
| |
2005 (property income), treat that plant or machinery as falling |
| |
within subsection (2)(b) (and not subsection (2)(a)). |
| |
(4) | Section 809ZA(2) has effect as if the reference to the amount of the |
| |
capital payment were to such amount as is apportioned under |
| |
subsection (2) in respect of the plant or machinery within subsection |
| |
| |
809ZD | Section 809ZA: expectation that relevant capital payment will not be |
| |
| |
(1) | This section applies for income tax purposes if— |
| |
(a) | section 809ZA applies by virtue of subsection (1)(a) of that |
| |
| |
(b) | at any time, the lessor reasonably expects that the relevant |
| |
capital payment will not be paid (or will not be paid in full). |
| |
(2) | For the purposes of calculating the profits of the lessor, a deduction |
| |
is allowed for the period of account which includes that time. |
| |
(3) | The amount of the deduction is equal to the amount reasonably |
| |
| |
(4) | No other deduction is allowed in respect of the matters mentioned in |
| |
| |
(2) | The amendment made by sub-paragraph (1) has effect in relation to— |
| |
|
| |
|
| |
|
(a) | cases where there is first an obligation of the kind mentioned in |
| |
subsection (1)(a) of section 809ZA of ITA 2007 on or after 13 |
| |
| |
(b) | capital payments within subsection (1)(b) of that section made on or |
| |
| |
(3) | In relation to a case where the condition in paragraph (a) or (b) of section |
| |
809ZA(1) of ITA 2007 was met before 12 March 2008, sections 809ZA to |
| |
809ZD of that Act have effect as if— |
| |
(a) | for section 809ZB(4) there were substituted— |
| |
“(4) | “Lease of plant or machinery”— |
| |
(a) | includes an equipment lease within the meaning of |
| |
Chapter 14 of Part 2 of CAA 2001, but |
| |
(b) | subject to that, does not include a lease of plant or |
| |
machinery and other property.”, and |
| |
(b) | section 809ZC were omitted. |
| |
3 | In section 785A of ICTA (rent factoring of leases of plant or machinery), after |
| |
| |
“(5B) | This section does not apply in relation to a relevant capital payment |
| |
to which section 785B below or section 809ZA of ITA 2007 applies; |
| |
and “relevant capital payment” here has the same meaning as in that |
| |
| |
Disposal events: grant of long funding lease |
| |
4 (1) | Section 61 of CAA 2001 (disposal events and disposal values) is amended as |
| |
| |
(2) | In the second column of the Table in subsection (2), in the entry relating to |
| |
item 5A, at the end insert “(“the relevant date”)”. |
| |
(3) | After subsection (5) insert— |
| |
“(6) | The following provisions apply for the purposes of calculating the |
| |
disposal value for item 5A of the Table. |
| |
(7) | Treat any rentals under the lease made (or due) on or before the |
| |
relevant date as made (and due) on the day after that date.” |
| |
(4) | After subsection (7) insert— |
| |
“(8) | Treat the lessor as having no liabilities of any kind at any time on the |
| |
relevant date (but only if the effect of doing so would be to increase |
| |
| |
(9) | For the purposes of subsection (8) “liabilities” includes, where the |
| |
lessor is a company, any share capital issued by the company which |
| |
falls to be treated for accounting purposes as a liability.” |
| |
(5) | The amendments made by sub-paragraphs (2) and (3) have effect in relation |
| |
to leases granted on or after 13 December 2007. |
| |
(6) | The amendment made by sub-paragraph (4) has effect in relation to leases |
| |
granted on or after 12 March 2008. |
| |
|
| |
|
| |
|
Deemed disposals: plant or machinery used under long funding lease |
| |
5 (1) | Section 25A of TCGA 1992 (long funding leases of plant and machinery: |
| |
deemed disposals) is amended as follows. |
| |
(2) | In subsection (4)(a), after “lessor” insert “(“the relevant date”)”. |
| |
(3) | After subsection (4) insert— |
| |
“(4A) | The following provisions apply for the purposes of subsection (4)(a). |
| |
(4B) | Treat any rentals under the lease made (or due) on or before the |
| |
relevant date as made (and due) on the day after that date.” |
| |
(4) | After subsection (4B) insert— |
| |
“(4C) | Treat the lessor as having no liabilities of any kind at any time on the |
| |
relevant date (but only if the effect of doing so would be to increase |
| |
the amount calculated under subsection (4)(a)). |
| |
(4D) | For the purposes of subsection (4C) “liabilities” includes, where the |
| |
lessor is a company, any share capital issued by the company which |
| |
falls to be treated for accounting purposes as a liability.” |
| |
(5) | The amendments made by sub-paragraphs (2) and (3) have effect in relation |
| |
to leases granted on or after 13 December 2007. |
| |
(6) | The amendment made by sub-paragraph (4) has effect in relation to leases |
| |
granted on or after 12 March 2008. |
| |
Plant or machinery subject to a sale and finance leaseback or lease and finance leaseback |
| |
6 (1) | Part 2 of CAA 2001 (plant and machinery allowances) is amended as follows. |
| |
(2) | In section 13(5) (use for qualifying activity of plant or machinery provided |
| |
for other purposes), omit “or 224”. |
| |
(3) | In section 52(5) (first-year allowances), omit “, 223”. |
| |
(4) | In section 57(3) (available qualifying expenditure), omit “224(1),”. |
| |
(5) | In section 66 (provisions referred to in section 60(1)(b)), omit the entry |
| |
| |
(6) | In section 70I (meaning of “short lease”), after subsection (9) insert— |
| |
“(10) | Where plant or machinery is the subject of a sale and finance |
| |
leaseback (as defined in section 221), any finance lease of a kind |
| |
mentioned in section 221(1)(c) is not a short lease (if it otherwise |
| |
| |
(11) | But, if the conditions set out in section 227(2) are met, B and S (within |
| |
the meaning of section 221) may make an election the effect of which |
| |
| |
(a) | subsection (10) above does not apply, |
| |
(b) | section 228(2) and (3) apply in relation to B (but this does not |
| |
prevent section 225 from applying), and |
| |
(c) | section 228(5) applies in relation to S. |
| |
|
| |
|
| |
|
(12) | Subsections (4) to (6) of section 227 apply in relation to elections |
| |
under this section as they apply in relation to elections under that |
| |
| |
(7) | In section 89(3)(b) (disposal to connected person), for “sections 222 to” |
| |
| |
(8) | In section 217 (no first-year allowance for B’s expenditure), for subsection (3) |
| |
| |
“(3) | This section does not apply if plant or machinery is the subject of a |
| |
sale and finance leaseback (as defined in section 221).” |
| |
(9) | In section 218 (restriction on B’s qualifying expenditure), for subsection (4) |
| |
| |
“(4) | This section does not apply if plant or machinery is the subject of a |
| |
sale and finance leaseback (as defined in section 221), but see section |
| |
| |
(10) | In section 219(1) (meaning of “finance lease”), omit “and which are not a long |
| |
funding lease in the case of the lessor”. |
| |
(11) | In section 221(1) (meaning of “sale and finance leaseback”), for “sections 222 |
| |
to 228” substitute “section 225”. |
| |
| |
(a) | section 222 (disposal value restricted), |
| |
(b) | section 223 (no first-year allowance for B’s expenditure), |
| |
(c) | section 224 (restriction on B’s qualifying expenditure), and |
| |
(d) | section 226 (qualifying expenditure limited in subsequent |
| |
| |
(13) | In section 227 (circumstances in which election may be made)— |
| |
(a) | in subsection (1)(b), omit sub-paragraph (ii) (and the “or” before it), |
| |
| |
(b) | in subsection (2)(c), for “217, 218, 223 or 224” substitute “217 or 218”, |
| |
| and the heading before that section accordingly becomes “Sale and leaseback: |
| |
election for special treatment”. |
| |
(14) | In section 228 (effect of election: relaxation of restriction on B’s qualifying |
| |
| |
(a) | in subsection (1), omit “or 224”, and |
| |
| |
(15) | In section 230(2) (exception for manufacturers and suppliers), for “sections |
| |
222 to” substitute “section”. |
| |
(16) | In section 241(1)(b) (no first-year allowance in respect of additional VAT |
| |
liability), omit “or 223(1)”. |
| |
(17) | Omit section 243 (restriction on B’s qualifying expenditure: sale and finance |
| |
| |
(18) | In section 774E(6) of ICTA (structured finance arrangements: exceptions), |
| |
omit the second sentence. |
| |
(19) | The amendments made by this paragraph have effect in the case of plant or |
| |
machinery which is the subject of a sale and finance leaseback (as defined in |
| |
|
| |
|
| |
|
section 221 of CAA 2001) where the date of the transaction (within the |
| |
meaning of that section) is on or after 9 October 2007. |
| |
(20) | In the case of plant or machinery which is the subject of a sale and finance |
| |
leaseback (as defined in section 221 of CAA 2001) where the date of the |
| |
transaction (within the meaning of that section) is before 12 March 2008, |
| |
section 70I(10) of CAA 2001 has effect as if for “any finance lease of a kind” |
| |
there were substituted “the finance lease”. |
| |
7 (1) | In section 70I of CAA 2001 (meaning of “short lease”), after subsection (9) |
| |
| |
“(9A) | Where plant or machinery is the subject of a lease and finance |
| |
leaseback (as defined in section 228A)— |
| |
(a) | the finance lease mentioned in section 228A(2)(c), and |
| |
(b) | any other finance lease forming part of the arrangements for |
| |
the lease and finance leaseback (except the lease referred to in |
| |
| |
| is not a short lease (if it otherwise would be).” |
| |
(2) | The amendment made by sub-paragraph (1) has effect in the case of plant or |
| |
machinery which is the subject of a lease and finance leaseback (as defined |
| |
in section 228A of CAA 2001) where the date of the transaction mentioned |
| |
in subsection (2)(a) of that section is on or after 12 March 2008. |
| |
Restriction on lessee’s right to elect that rules for non-long funding leases apply |
| |
8 (1) | In section 70H of CAA 2001 (lessee: requirement for tax return treating lease |
| |
as long funding lease), after subsection (1) insert— |
| |
“(1A) | Subsection (1) does not apply in respect of a lease of plant or |
| |
machinery (“lease A”) if, at any time in the relevant period— |
| |
(a) | the lessee is the lessor of a lease of any of that plant or |
| |
machinery (“lease B”), and |
| |
(b) | lease B is a long funding lease. |
| |
(1B) | In subsection (1A) “the relevant period” means the period— |
| |
(a) | beginning with the inception of lease A, and |
| |
(b) | ending with the making of the tax return for the initial period |
| |
(or, if that return is amended, the making of the last |
| |
| |
(2) | The amendment made by sub-paragraph (1) has effect in relation to leases |
| |
entered into on or after 13 December 2007. |
| |
Lessors under long funding leases of plant or machinery |
| |
9 (1) | Chapter 5A of Part 12 of ICTA (special rules for long funding leases of plant |
| |
or machinery: corporation tax) is amended as follows. |
| |
|
| |
|
| |
|
(2) | After section 502G insert— |
| |
“Lessors under long funding finance or operating leases: avoidance etc |
| |
502GA | Cases where ss. 502B to 502G do not apply: plant or machinery held |
| |
| |
(1) | Sections 502B to 502G do not apply in the case of a company which |
| |
is or has been the lessor of any plant or machinery under a long |
| |
funding lease if the following condition is met. |
| |
(2) | The condition is that any part of the expenditure incurred by the |
| |
company on the acquisition of the plant or machinery for leasing |
| |
| |
(a) | is (apart from those sections) allowable as a deduction in |
| |
calculating its profits or losses for the purposes of |
| |
| |
(b) | is so allowable as a result of the plant or machinery forming |
| |
part of its trading stock. |
| |
(3) | For the purposes of this section the cases in which expenditure |
| |
incurred by a company on the acquisition of any plant or machinery |
| |
for leasing under a lease is allowable as such a deduction include any |
| |
| |
(a) | the company becomes entitled to the deduction at any time |
| |
after the expenditure is incurred, and |
| |
(b) | the deduction arises as a result of the plant or machinery |
| |
forming part of its trading stock at that time. |
| |
| |
(a) | at any time any of sections 502B to 502G has applied for |
| |
determining the amounts to be taken into account in |
| |
calculating the profits or losses of the company for the |
| |
purposes of corporation tax, and |
| |
(b) | the condition in subsection (2) is met at any subsequent time, |
| |
| those amounts, and any other amounts which (as a result of this |
| |
section) are to be so taken into account, are subject to such |
| |
adjustments as are just and reasonable. |
| |
(5) | All such assessments and adjustments of assessments are to be made |
| |
as are necessary to give effect to subsection (4).” |
| |
(3) | After section 502GA insert— |
| |
“502GB | Cases where ss. 502B to 502G do not apply: lessor also lessee under |
| |
| |
(1) | This section applies if— |
| |
(a) | a company is the lessee of any plant or machinery under a |
| |
lease (“lease A”) that is not a long funding lease, |
| |
(b) | it enters into a lease (“lease B”) of any of that plant or |
| |
machinery (as lessor), and |
| |
(c) | lease B is a long funding lease. |
| |
(2) | Sections 502B to 502G do not apply in relation to lease B. |
| |
|
| |
|