C1C7C4C6C5C3Part 2 Plant and machinery allowances
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
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
Pt. 2 modified (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 para. 21(2) (with s. 38(2) ); S.I. 2004/2575 , art. 2(1) , Sch. 1
Pt. 2 restricted (5.10.2004) by Energy Act 2004 (c. 20) , s. 198(2) , Sch. 9 para. 10 (with s. 38(2) ); S.I. 2004/2575 , art. 2(1) , Sch. 1
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
Chapter 6 Hire-purchase etc. and plant or machinery provided by lessee
F1Lessees under long funding leases
Ss. 70A-70E and cross-heading inserted (with effect in accordance with Sch. 8 para. 15 of the amending Act) by Finance Act 2006 (c. 25), Sch. 8 para. 6
70EDisposal events and disposal values
1
This section applies where—
a
a person is the lessee of plant or machinery under a long funding lease,
b
as a result of section 70A, the person falls to be regarded as having incurred qualifying expenditure on the provision of the plant or machinery, and
c
the lease terminates.
2
In the case of that person—
a
the termination of the lease is a disposal event, and
b
the person is required to bring into account a disposal value for the chargeable period in which that disposal event occurs.
3
The amount of the disposal value varies according to whether the lease is—
a
a long funding operating lease (see subsections (4) to (6)), or
b
a long funding finance lease (see subsections (7) and (8)).
4
If the lease is a long funding operating lease, the disposal value is the sum of—
a
element A (see subsection (5)), and
b
element B (see subsection (6)).
5
Element A is the amount (if any) by which—
a
the market value of the plant or machinery at the later of—
i
the commencement of the term of the lease,
ii
the date on which the plant or machinery is first brought into use for the purposes of the qualifying activity,
exceeds
b
the aggregate amount of the reductions that fell to be made under section 502K of ICTA or 148I of ITTOIA 2005 for periods of account in which the person was the lessee.
6
Element B is the sum of any amounts payable to the person which are calculated by reference to the termination value.
7
If, in the case of the person, the lease is a long funding finance lease, the amount of the disposal value is found by first finding the sum of—
a
any amounts payable to the person which are calculated by reference to the termination value, and
b
if the lease terminates before the end of the term, the amount that would fall to be recognised as the present value, immediately before the termination, of the balance of the minimum lease payments (see subsection (8)) if appropriate accounts were prepared by the person,
and then reducing that sum (but not below nil) by subtracting from it any amount payable by the person to the lessor for or in consequence of the termination.
8
For the purposes of subsection (7)(b)—
a
the balance of the minimum lease payments is the amount by which MLP exceeds TMLP, where—
MLP is the amount of the minimum lease payments, and
TMLP is the amount that would have been the minimum lease payments if the term of the lease had been such as to expire on the day of the termination, and
b
“appropriate accounts” are accounts prepared in accordance with generally accepted accounting practice immediately before the termination of the lease.
9
If the termination of the lease gives rise to a disposal event in the case of the person apart from this section, that disposal event is to be ignored.
10
This section is to be construed as one with section 70A.
Pt. 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. 34) (as amended (20.2.2003) by S.I. 2003/333, art. 14)