Part 2 Plant and machinery allowances

F1Chapter 6AInterpretation of provisions about long funding leases

Avoidance

70VTax avoidance involving international leasing

(1)

This section applies where matters are so arranged that there are plant or machinery leases such that—

(a)

under a lease by a non-resident, an asset is provided directly or indirectly to a resident,

(b)

the direct provision of the asset to the resident is by a lease which, in the case of the resident, is a long funding lease or a lease to which section 67 (hire purchase etc) applies,

(c)

the asset is used by the resident for the purpose of leasing it under a lease (the “relevant lease”) that would not (apart from this section) be a long funding lease in the case of the resident, and

(d)

under the relevant lease, the asset is provided directly or indirectly (but by a lease) to a non-resident.

(2)

Subsection (3) applies if the sole or main purpose of arranging matters in that way is to obtain a tax advantage by securing that allowances under this Part are available to a resident by virtue of—

(a)

section 67 (hire purchase), or

(b)

section 70A (long funding leases).

(3)

In any such case, the relevant lease is deemed to be a long funding lease in the case of the resident who is the lessor under it.

(4)

The reference in this section to a person obtaining a tax advantage (see section 577(4)) also includes a reference to a person obtaining a tax advantage within the meaning of F2section 1139 of CTA 2010.

(5)

In this section—

“non-resident” means a person who—

(a)

is not resident in the United Kingdom, and

(b)

does not use the plant or machinery exclusively for earning profits chargeable to tax;

“resident” means a person who—

(a)

is resident in the United Kingdom, or

(b)

uses the plant or machinery exclusively for earning profits chargeable to tax.