Finance Act 1994

Leased assets

19 (1) For the purposes of section 781 of the Taxes Act 1988 (assets leased to traders and others), where the interest of the lessor or the lessee under a lease, or any other interest in an asset, vests in any person by virtue of a relevant transfer—

(a) the transfer shall (notwithstanding anything in section 783(4) of that Act) be treated as made without any capital sum having been obtained in respect of that interest by the predecessor or the transferee; and

(b) in a case where the interest is an interest under a lease, payments made by the predecessor under the lease before the coming into force of the transfer shall be treated as if they had been made under that lease by the transferee.

(2) No charge shall arise under section 781(1) of the Taxes Act 1988 by virtue of section 783(2) of that Act in a case where the capital sum mentioned in section 781(1)(b)(i) or (ii) of that Act is the consideration obtained (or treated by section 783(4) of that Act as obtained) by the Board on a disposal pursuant to a direction under Part II of the [1993 c. 43.] Railways Act 1993 of securities of a subsidiary of the Board.

(3) The grant of a lease of an asset—

(a) by a person to an associate of his, pursuant to an obligation imposed by a restructuring scheme by virtue of section 91(1)(c) of the [1993 c. 43.] Railways Act 1993,

(b) by a person to an associate of his, pursuant to paragraph 2 of Schedule 8 to that Act in connection with a restructuring scheme, or

(c) by the Board, any of the Board’s wholly owned subsidiaries, a publicly owned railway company or a company wholly owned by the Franchising Director to an associate of the grantor, pursuant to a direction under that Act,

shall be treated for the purposes of section 781 of the Taxes Act 1988 (notwithstanding anything in section 783(4) of that Act) as made without any capital sum having been obtained by the grantor.

(4) No charge shall arise under section 781(1) of the Taxes Act 1988 in a case where the capital sum mentioned in section 781(1)(b)(i) or (ii) of that Act is the consideration obtained (or treated by section 783(4) of that Act as obtained) on a disposal of, or of an interest in, rolling stock by—

(a) the Board,

(b) a wholly owned subsidiary of the Board,

(c) a publicly owned railway company,

(d) a company wholly owned by the Franchising Director, or

(e) a body which, at the time when it acquired the rolling stock, fell within paragraph (b), (c) or (d) above,

in any case where before, at or after the time when the disposal is made the lessee’s interest in a lease of the rolling stock has belonged to an associate of the person making the disposal.

(5) Section 782 of the Taxes Act 1988 (leased assets: special cases) shall not apply to payments made by—

(a) the Board,

(b) a wholly owned subsidiary of the Board,

(c) a publicly owned railway company,

(d) a company wholly owned by the Franchising Director,

(e) a successor company, or

(f) a franchise company,

under a lease of an asset which at any time before the creation of the lease was used by a body falling within paragraphs (a) to (d) above for the purposes of a trade carried on by that body and which was, when so used, owned by that body.

(6) Section 781 of the Taxes Act 1988 shall not, by virtue of sub-paragraph (5) above, apply to any payments to which, by virtue of section 782 of that Act, it would not have applied apart from that sub-paragraph.

(7) In this paragraph—

• “asset” has the meaning given by section 785 of the Taxes Act 1988;

• “associate” shall be construed in accordance with section 783(10) of that Act;

• “capital sum” has the meaning given by section 785 of that Act;

• “lease” has the meaning given by section 785 of that Act;

• “rolling stock” has the meaning given by section 83(1) of the [1993 c. 43.] Railways Act 1993;

• “securities” has the meaning given by section 142 of the [1986 c. 60.] Financial Services Act 1986.