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Corporation Tax Act 2010

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Corporation Tax Act 2010, Section 551 is up to date with all changes known to be in force on or before 18 November 2019. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations. Help about Changes to Legislation

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551After section 809ZD insert—

809ZECapital payment”, “relevant capital payment” etc

(1)This section gives the meaning of “capital payment”, “relevant capital payment” and references to payment for the purposes of sections 809ZA to 809ZD and this section.

(2)Capital payment” means any payment except one which, if made to the lessor—

(a)would fall to be included in a calculation of the lessor's income for income tax purposes, or

(b)would so fall but for section 148A of ITTOIA 2005 (rental earnings under long funding finance lease).

(3)A capital payment, in relation to a lease or relevant arrangement, is “relevant” if condition A or B is met (but this is subject to subsections (6) and (7)).

(4)Condition A is that the capital payment is payable (or paid), directly or indirectly, by or on behalf of the lessee to the lessor or another person on the lessor's behalf in connection with—

(a)the grant, assignment, novation or termination of the lease, or

(b)any provision of the lease or relevant arrangement (including the variation or waiver of any such provision).

(5)Condition B is that rentals payable under the lease are less than, or payable later than, they might reasonably be expected to be if there were no obligation to make the capital payment and it were not made.

(6)A capital payment is not “relevant” so far as it—

(a)reduces the amount of expenditure incurred by the lessor for the purposes of CAA 2001 in respect of the plant or machinery in question or would reduce it but for section 536 of that Act (contributions not made by public bodies and not eligible for tax relief), or

(b)is compensation for loss resulting from damage to, or damage caused by, the plant or machinery in question.

(7)If—

(a)a capital payment is an initial payment under a long funding lease for the purposes of Part 2 of CAA 2001 (see section 70YI of that Act), and

(b)under section 61 of that Act (disposal events and disposal values) the commencement of the term of the lease (as defined in section 70YI of that Act) is an event that requires the lessor to bring a disposal value into account,

the capital payment is only “relevant” so far as it exceeds the amount that is the disposal value for the purposes of Part 2 of that Act.

(8)References to payment include the provision of value by any means other than the making of a payment.

(9)Accordingly—

(a)references to the making of a payment include the passing of value by any other means, and

(b)references to the amount of the payment include the value passed.

809ZFFurther interpretation of section 809ZA etc

(1)This section applies for the purposes of sections 809ZA to 809ZE and this section.

(2)Lease” includes—

(a)a licence, and

(b)the letting of a ship or aircraft on charter or the letting of any other asset on hire,

and “lessor” and “lessee” must be read accordingly.

(3)Lease of plant or machinery” includes a lease of plant or machinery and other property, but does not include a lease to which subsection (4) or (5) applies.

(4)This subsection applies to a lease if any income attributable to it and received by the lessor would be chargeable to tax under Part 3 of ITTOIA 2005 (property income).

(5)This subsection applies to a lease of plant or machinery if the lessor has incurred on the plant or machinery what would be qualifying expenditure within the meaning of Part 2 of CAA 2001 but for section 34A of that Act (expenditure on plant or machinery for long funding leasing not qualifying expenditure).

(6)Relevant arrangement” means any agreement or arrangement relating to a lease of plant or machinery, including one made before the lease is entered into or after it has ended.

(7)Accordingly, “lessor” and “lessee” include prospective and former lessors and lessees.

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