Corporation Tax Act 2010

61 (1) Chapter 2 of Part 9 (long funding leases of plant or machinery)— U.K.

(a) does not apply to any lease in relation to which condition A, B or C is met,

(b) does not apply in the case of the relevant lessor (see sub-paragraph (6)) to any lease in relation to which condition D is met, and

(c) does not apply in the case of the relevant lessee (see sub-paragraph (7)) to any lease in relation to which condition E is met.

(2) But sub-paragraph (1) does not apply in relation to a lease in the case of a lessor (and accordingly Chapter 2 of Part 9 applies) if an election under regulations made under paragraph 16 of Schedule 8 to FA 2006 (election for lease to be treated as long funding lease for tax purposes)—

(a) is in force in the case of the lease, and

(b) has effect in the case of the lessor.

(3) Condition A is that—

(a) the lease was finalised before 21 July 2005, and

(b) on 17 May 2006 the lessor was within the charge to corporation tax.

(4) Condition B is that—

(a) the commencement of the term of the lease was before 1 April 2006, and

(b) the plant or machinery is brought into use for the purposes of a qualifying activity carried on by the person concerned before that date.

(5) Condition C is that—

(a) the lease is an excepted lease, and

(b) the commencement of the term of the lease is on or after 1 April 2006.

(6) Condition D is that—

(a) Chapter 2 of Part 9 and the amendments of CAA 2001 made by Schedule 8 to FA 2006 do not apply to a lease (“the old lease”) in the case of a lessor (“the old lessor”),

(b) there is a transfer of plant or machinery,

(c) immediately before the transfer the old lessor is within the charge to tax,

(d) the transfer is in such circumstances that, if the amendments of CAA 2001 made by Schedule 8 to FA 2006 did apply to the old lease, section 70W(4)(b) of CAA 2001 (transfers, assignments etc by lessor) would have effect, in relation to the person who would be the new lessor if that section applied (“P”), to treat the lease that would be the new lease in that case as a lease that is not a long funding lease;

and P is the relevant lessor for the purposes of sub-paragraph (1)(b).

(7) Condition E is that—

(a) Chapter 2 of Part 9 and the amendments of CAA 2001 made by Schedule 8 to FA 2006 do not apply to a lease (“the old lease”) in the case of a lessee (“the old lessee”),

(b) there is a transfer of plant or machinery,

(c) immediately before the transfer the old lessee is within the charge to tax,

(d) the transfer is in such circumstances that, if the amendments of CAA 2001 made by Schedule 8 to FA 2006 did apply to the old lease, section 70X(4)(b) of CAA 2001 (transfers, assignments etc made by lessee) would have effect, in relation to the person who would be the new lessee if that section applied (“Q”), to treat the lease that would be the new lease in that case as a lease that is not a long funding lease;

and Q is the relevant lessee for the purposes of sub-paragraph (1)(c).

(8) In the application of section 70W(4)(b) of CAA 2001 for the purposes of sub-paragraph (6)(d) and the application of section 70X(4)(b) of that Act for the purposes of sub-paragraph (7)(d), the old lease is to be treated as a lease that is not a long funding lease.

(9) Paragraphs 17 to 27 of Schedule 8 to FA 2006 (interpretational and supplemental provisions) apply for the purposes of this paragraph as they apply for the purposes of Part 4 of that Schedule.

(10) See, in particular—

(a) paragraphs 17 and 26 of that Schedule for the meaning of “excepted lease”,

(b) paragraph 23 of that Schedule for when a lease is “finalised”, and

(c) paragraph 27 of that Schedule for general interpretation.

(11) See also paragraph 21 of that Schedule, which—

(a) deems a separate long funding lease that is an excepted lease to exist in some cases where a person incurred expenditure before 19 July 2006 on the provision of plant or machinery for leasing under a long funding lease that is not itself excepted, and

(b) provides for rentals under the actual lease to be apportioned to the deemed lease.