Sale and finance leasebacksU.K.
221 Meaning of “sale and finance leaseback”U.K.
(1)For the purposes of this section and [section 225], plant or machinery is the subject of a sale and finance leaseback if—
(a)B enters into a relevant transaction with S,
(b)after the date of the transaction, the plant or machinery—
(i)continues to be used for the purposes of [ an activity carried on by S or by a person (other than B) who is connected with S,]
(ii)is used for the purposes of a qualifying activity carried on by S or by a person (other than B) who is connected with S, without having been used since that date for the purposes of any other qualifying activity except that of leasing the plant or machinery, or
(iii)is used for the purposes of a non-qualifying activity carried on by [S or by a person (other than B) who is connected with S], without having been used since that date for the purposes of a qualifying activity except that of leasing the plant or machinery, and
(c)it is directly or indirectly as a consequence of having been leased under a finance lease that the plant or machinery is available to be so used after that date.
(2)In this section—
“the date of the transaction” means the date of the sale, the making of the contract or the assignment referred to in section 213(1)(a) to (c),
“non-qualifying activity” means any activity which is not a qualifying activity, and
“qualifying activity” includes any activity listed in section 15(1) even if any profits or gains from it are not chargeable to tax.
222 Disposal value restrictedU.K.
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223 No first-year allowance for B’s expenditureU.K.
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224 Restriction on B’s qualifying expenditureU.K.
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225 B’s qualifying expenditure if lessor not bearing non-compliance riskU.K.
(1)This section applies if plant or machinery is the subject of a sale and finance leaseback, and the finance lease, or any transaction or series of transactions of which it forms a part, makes provision which—
(a)removes from the lessor the whole, or the greater part, of any risk, which would otherwise fall directly or indirectly on the lessor, of any person sustaining a loss if payments under the lease are not made in accordance with its terms, and
(b)does so otherwise than by means of guarantees from persons connected with the lessee.
(2)In such a case the following are not qualifying expenditure for the purposes of this Part —
(a)B’s expenditure under the relevant transaction;
(b)if the lessor is a different person from B, the expenditure incurred by the lessor on the provision of the plant or machinery.
(3)For the purposes of determining whether this section applies, the lessor and the persons connected with the lessor are treated as the same person.
226 Qualifying expenditure limited in subsequent transactionsU.K.
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