PART XII SPECIAL CLASSES OF COMPANIES AND BUSINESSES

Chapter 5A Special rules for long funding leases of plant or machinery: corporation tax

Lessees under long funding finance leases

502I Lessee under long funding finance lease: limit on deductions
(1) This section applies for determining for the purposes of corporation tax the profits of a company for any period of account in which it is the lessee of any plant or machinery under a long funding finance lease.
(2) In calculating the company's profits for the period of account,—
(a) the amount deducted in respect of amounts payable under the lease,
must not exceed
(b) the amounts which, in accordance with generally accepted accounting practice, fall (or would fall) to be shown in the company's accounts as finance charges in respect of the lease.
(3) If the lease is one which, under generally accepted accounting practice, falls (or would fall) to be treated as a loan, subsection (2) above applies as if the lease were one which, under generally accepted accounting practice, fell to be treated as a finance lease.