4(1)This paragraph applies in relation to any lease entered into on or after 19th December 2002 and before 16 April 2003.U.K.
(2)Part 10 of the Schedule 22 to the Finance Act 2000 (c. 17) has effect as if, instead of the paragraph inserted after paragraph 89 by paragraph 1(5) above, the following paragraph were inserted—
89A(1)Paragraph 89(1), and the provisions of this Part of this Schedule listed there, do not apply in the following cases.
(2)The first case is where the ship is chartered out by a person who is responsible—
(a)for the operation of the ship, including the appointment of the master and those members of the crew engaged in navigation, throughout the period of the charter, and
(b)for defraying all expenses in connection with the ship throughout that period, or substantially all such expenses other than those directly incidental to a particular voyage or to the employment of the ship during that period.
For the purposes of this sub-paragraph a person is “responsible” if he is responsible as principal or if he appoints another person, other than the lessee or a person connected with the lessee, to be responsible in his place.
(3)The second case is where—
(a)the ship is chartered out to another person (“the charterer”) because of short-term over-capacity,
(b)the person chartering out the ship does so in the course of a trade that consists of or includes operating ships, and
(c)the conditions in sub-paragraph (4) are met.
(4)Those conditions are—
(a)that the period of the charter does not exceed three years, and there is no provision or agreement under which it could be extended beyond three years;
(b)that the period of the charter, together with any other periods in the same five years during which the ship is chartered out to the charterer or a person connected with him, does not exceed three years in total;
(c)that neither the charterer nor any person connected with him has an option to purchase the ship.
(5)In sub-paragraph (4)(b)—
(a)the reference to any other periods during which the ship is chartered out does not include any period during which it is chartered out under a lease entered into before 19th December 2002;
(b)“the same five years” means any period of five years that includes the period of the charter mentioned in that sub-paragraph.
(6)References in this paragraph to the period of a charter are to the term specified in the lease or, if longer, the actual period during which the ship is chartered.
(7)Section 839 of the Taxes Act 1988 (connected persons) applies for the purposes of this paragraph.”.
(3)Paragraph 93(1) of that Schedule (certificates required to support claim by lessor) has effect as if after paragraph (a) there were inserted—
“(aa)that the lease is such that, by virtue of paragraph 89A (exception for ordinary charters), paragraph 89(1) does not apply, or”.