Part 2Income tax, corporation tax and capital gains tax

Miscellaneous

53Leases and changes to accounting standards

1

This section applies where there is a change in a leasing accounting standard which—

a

occurs on or after 1 January 2011, and

b

is not within subsection (3),

(in this section referred to as a “leasing change”).

2

“Leasing accounting standard” means—

a

International Accounting Standard 17 (leases) issued by the International Accounting Standards Board,

b

Statement of Standard Accounting Practice 21 (accounting for leases and hire purchase contracts) recognised by the Accounting Standards Board,

c

the part of the International Financial Reporting Standard for Small and Medium-sized Entities issued by the International Accounting Standards Board which relates specifically to leases,

d

the part of the Financial Reporting Standard for Smaller Entities issued by the Accounting Standards Board which relates specifically to leases, or

e

any accounting standard, or part of an accounting standard, which replaces (wholly or in part) a standard or part mentioned in paragraphs (a) to (d).

3

A change is within this subsection if, and to the extent that, it is one which permits or requires persons, when preparing accounts in accordance with UK GAAP, to account for a lease, or a transaction accounted for as a lease, in a manner equivalent to that provided for by the International Financial Reporting Standard for Small and Medium-sized Entities issued by the International Accounting Standards Board (disregarding any leasing change which may be made to that Standard).

4

Changes within subsection (1) include those which may or must be adopted for periods of account which fall wholly or partly before the time the change occurs or before the day on which this Act is passed.

5

For the purposes of the Taxes Acts any reference in those Acts (other than this section)—

a

to a thing being determined or done in accordance with or by reference to generally accepted accounting practice, or

b

to accounts prepared (or not prepared) in accordance with international accounting standards or UK GAAP,

is to be construed as if any leasing change had not occurred.

6

Section 997 of ITA 2007 and section 1127 of CTA 2010 (meaning of “generally accepted accounting practice” and related expressions in the Tax Acts) have effect subject to subsection (5).

7

Where a person prepares or is required to prepare accounts in accordance with new standards for a period of account, the Taxes Acts (other than this section) have effect as if the person prepared or was required to prepare accounts, for that period, in accordance with the corresponding old standards.

8

For the purposes of subsection (7)—

a

if the new standards are international accounting standards, the corresponding old standards are international accounting standards disregarding any leasing change, and

b

if the new standards are UK GAAP, the corresponding old standards are UK GAAP disregarding any leasing change.

9

In this section—

  • “accounting body” means the International Accounting Standards Board or the Accounting Standards Board, or a successor body to either of those Boards;

  • “accounting standard” includes any statement of practice, guidance or other similar document issued or recognised by an accounting body;

  • “change”, in relation to a leasing accounting standard, means the issue, revocation, amendment or recognition of, or withdrawal of recognition from, the standard by an accounting body;

  • “international accounting standards” has the same meaning as in section 1127 of CTA 2010;

  • “new standards” means accounting standards which reflect one or more leasing changes;

  • “Taxes Acts” means—

    1. a

      the Tax Acts, and

    2. b

      TCGA 1992 and all other enactments relating to capital gains tax;

  • “UK GAAP” means UK generally accepted accounting practice as defined in section 997(2) of ITA 2007 and section 1127(2) of CTA 2010.

10

This section has effect in relation to any period (including any period falling wholly or partly before the day on which this Act is passed) in respect of which a change to a leasing accounting standard which occurs on or after 1 January 2011 may or must be adopted by any person for accounting purposes.