Modifications etc. (not altering text)
C1 S. 45H(2) modified (with effect in accordance with s. 167 of the amending Act) by Finance Act 2003 (c. 14) , Sch. 30 para. 7
Modifications etc. (not altering text)
C2Pt. 2 modified (24.2.2003) by Proceeds of Crime Act 2002 (c. 29), s. 458(1), Sch. 10 para. 12 (with Sch. 10 para. 17(1)); S.I. 2003/120, art. 2, Sch. (with arts. 3 4) (as amended (20.2.2003) by S.I. 2003/333, art. 14)
C3 Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 paras. 10, 22 (with s. 38(2) ); S.I. 2004/2575 , art. 2(1) , Sch. 1
C4 Pt. 2 modified (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 paras. 9(2), 21(2) (with s. 38(2)); S.I. 2004/2575, art. 2(1) , Sch. 1
C5 Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 4 para. 4 ; S.I. 2004/2575 , art. 2(1) , Sch. 1
C6Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 19
C7Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 para. 35
C8Pt. 2 modified (22.7.2008) by Crossrail Act 2008 (c. 18), Sch. 13 paras. 36, 37
C9Pt. 2 modified (21.7.2009) by Finance Act 2009 (c. 10), s. 24
C10Pt. 2 modified (17.7.2013) by Finance Act 2013 (c. 29), s. 73(7)-(11) (with s. 73(6))
Textual Amendments
F1Pt. 2 Ch. 6A inserted (with effect in accordance with Sch. 8 para. 15 of the amending Act) by Finance Act 2006 (c. 25), Sch. 8 para. 7
Modifications etc. (not altering text)
C11Pt. 2 Ch. 6A applied (21.7.2008) by Finance Act 2008 (c. 9), Sch. 20 para. 11(12)
C12Pt. 2 Ch. 6A applied (21.7.2009) by Finance Act 2009 (c. 10), Sch. 33 para. 9(c)
C13Pt. 2 Ch. 6A applied (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), ss. 381(1), 1184(1) (with Sch. 2)
(1)A lease meets the finance lease test in the case of any person if the lease is one which, under generally accepted accounting practice, falls (or would fall) to be treated as a finance lease or a loan in the accounts—
(a)of that person, or
(b)where that person is the lessor, of any person connected with him.
(2)In this section “accounts”, in relation to a company, includes any accounts which—
(a)relate to two or more companies of which that company is one, and
(b)are drawn up in accordance with generally accepted accounting practice.
(3)Where for any period—
(a)a person is not within the charge to income tax or corporation tax by reason of not being resident in the United Kingdom, and
(b)accounts are not prepared in accordance with international accounting standards or UK generally accepted accounting practice,
any question relating to generally accepted accounting practice is to be determined for the purposes of this section by reference to generally accepted accounting practice with respect to accounts prepared in accordance with international accounting standards.
(1)A lease meets the lease payments test if—
(a)the present value of the minimum lease payments (see section 70YE),
is equal to
(b)80% or more of the fair value of the leased plant or machinery.
(2)The present value of the minimum lease payments is to be calculated by using the interest rate implicit in the lease.
(3)In this section “fair value” means—
(a)the market value of the leased plant or machinery,
less
(b)any grants receivable towards the purchase or use of that plant or machinery.
(4)For the purposes of this section—
(a)the interest rate implicit in the lease is the interest rate that would apply in accordance with normal commercial criteria, including, in particular, generally accepted accounting practice (where applicable), but
[F2(b)if a rate cannot be determined in accordance with paragraph (a), the interest rate implicit in the lease is taken to be 1% above LIBOR.]
[F3(5)For this purpose—
(a)LIBOR means the London interbank offered rate at the relevant time for deposits for a term of 12 months in the applicable currency,
(b)the relevant time is the inception of the lease, and
(c)the applicable currency is the currency in which payments under the lease are payable.]
Textual Amendments
F2S. 70O(4)(b) substituted (with effect in accordance with Sch. 14 para. 10 of the amending Act) by Finance Act 2019 (c. 1), Sch. 14 para. 9(2)
F3S. 70O(5) inserted (with effect in accordance with Sch. 14 para. 10 of the amending Act) by Finance Act 2019 (c. 1), Sch. 14 para. 9(3)
A lease meets the useful economic life test if the term of the lease is more than 65% of the remaining useful economic life of the leased plant or machinery.]