Part 9 Leasing plant or machinery

Chapter 4 Sales of lessors: leasing business carried on by a company in partnership

Qualifying changes in partner company's interest in business

417 Partner company's income and other companies' matching expense
(1) This section applies if on any day (“the relevant day”)—
(a) the partner company carries on a business of leasing plant or machinery in partnership with other persons,
(b) the partner company is within the charge to corporation tax in respect of the business, and
(c) there is a qualifying change in the partner company's interest in the business on the relevant day (see sections 415 and 416).
(2) On the relevant day—
(a) the partner company is treated as receiving an amount of income, and
(b) any other company which carries on the business on that day and which is within the charge to corporation tax in respect of the business is treated as incurring an expense.
(3) The income—
(a) is treated as a receipt of the partner company's notional business (see subsection (6)), and
(b) is brought into account in calculating for corporation tax purposes the profits of that business for the accounting period in which it is treated as received.
(4) Except where subsection (5) applies, the expense—
(a) is treated as an expense of the other company's notional business, and
(b) is allowed as a deduction in calculating for corporation tax purposes the profits of that business for the accounting period in which it is treated as incurred.
(5) If at the end of the relevant day the other company is the only person carrying on the business, the expense—
(a) is treated as an expense incurred by the other company in its carrying on of the business (at a time when it is the only person carrying it on), and
(b) is allowed as a deduction in calculating for corporation tax purposes the profits of the business for the accounting period in which it is treated as incurred.
(6) In this Chapter a company's “notional business” means the business the profits or losses of which are determined, in relation to the company, under section 1259 of CTA 2009 (calculation of firm's profits and losses).
(7) This section is supplemented by sections 418 and 419.
(8) This section is subject to section 420 (exception: companies carrying on business ceasing to share in its profits).