Finance Act 1997

The arrangements and circumstances in paragraph 3(5) E+W+S+N.I.

4 (1) The arrangements mentioned in paragraph 3(5)(a) above are arrangements under which— E+W+S+N.I.

(a) the lessee or a person connected with him may acquire, whether directly or indirectly, the leased asset, or an asset representing the leased asset, from the lessor or a person connected with the lessor; and

(b) in connection with that acquisition, the lessor or a person connected with him may receive, whether directly or indirectly, a qualifying lump sum from the lessee or a person connected with the lessee.

(2) The circumstances mentioned in paragraph 3(5)(b) above are circumstances which make it more likely—

(a) that the events described in sub-paragraph (3) below will occur, than

(b) that the event described in sub-paragraph (4) below will occur.

(3) The events mentioned in sub-paragraph (2)(a) above are—

(a) that the lessee or a person connected with him will acquire, whether directly or indirectly, the leased asset or an asset representing the leased asset from the lessor or a person connected with the lessor; and

(b) that, in connection with that acquisition, the lessor or a person connected with him will receive, whether directly or indirectly, a qualifying lump sum from the lessee or a person connected with the lessee.

(4) The event mentioned in sub-paragraph (2)(b) above is that, before any such acquisition as is mentioned in sub-paragraph (3) above takes place, the leased asset or, as the case may be, the asset representing the leased asset, will have been acquired, in a sale on the open market, by a person who is not the lessor or the lessee and who is not connected with either of them.

(5) In this paragraph, “qualifying lump sum” means any sum which is not rent but at least part of which would F1 ... fall for accounting purposes to be treated in accordance with [F2 generally accepted accounting practice] as a return on investment in respect of a finance lease or loan.

Annotations:

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Amendments (Textual)

F1 Words in Sch. 12 para. 4(5) repealed (24.7.2002) by Finance Act 2002 (c. 23), s. 141, Sch. 40 Pt. 3(16)

F2 Words in Sch. 12 para. 4(5) substituted (24.7.2002) by Finance Act 2002 (c. 23), s. 103(4)(e)