Basic terms
105“Leasing”, “overseas leasing” etc.
(1)In this Chapter—
(a)“leasing” includes letting a ship or aircraft on charter or letting any other asset on hire, and
(b)references to a lease include a sub-lease (and references to a lessor or lessee are to be read accordingly).
(2)Plant or machinery is used for overseas leasing if it is used for the purpose of being leased to a person who—
(a)is not resident in the United Kingdom, and
(b)does not use the plant or machinery exclusively for earning profits chargeable to tax.
(3)In this Chapter “profits chargeable to tax”—
(a)includes profits chargeable under section 830(4) of ICTA (profits from exploration and exploitation of the seabed etc.), but
(b)excludes profits arising to a person who, under double taxation arrangements, is afforded or is entitled to claim any relief from the tax chargeable on those profits.
(4)“Double taxation arrangements” means arrangements specified in an Order in Council making any such provisions as are referred to in section 788 of ICTA.
(5)“Protected leasing” of plant or machinery means—
(a)short-term leasing of the plant or machinery (as defined in section 121), or
(b)if the plant or machinery is a ship, aircraft or transport container, the use of the ship, aircraft or transport container for a qualifying purpose under section 123 or 124 (letting on charter to UK resident etc.).
(6)In this Chapter “qualifying activity” includes (subject to any provision to the contrary) any activity listed in section 15(1) even if any profits or gains from it are not chargeable to tax.
106The designated period
(1)Subject to subsection (2), the designated period, in relation to expenditure incurred by a person on the provision of plant or machinery, is the period of 10 years beginning with the date on which he first brought the plant or machinery into use.
(2)If the person who incurred the expenditure ceases to own the plant or machinery before the end of the 10 year period, the designated period ends on the date when he ceases to own it.
(3)For the purposes of subsection (2), a person is to be treated as continuing to own plant or machinery so long as it is owned by a person who—
(a)is connected with him, or
(b)acquired it from him as a result of one or more disposals on the occasion of which, or each of which, the qualifying activity carried on by the person making the disposal was treated as continuing under one of the relevant provisions of ICTA.
(4)“The relevant provisions of ICTA” means section 113(2) or 114(1) (effect of change in persons carrying on a trade etc.).