(1)This section is about the meaning of “starting value” in section 379 in relation to a long funding operating lease (“the section 379 lease”).
(2)Except where subsection (3) applies, the starting value is the market value of the plant or machinery at the commencement of the term of the section 379 lease.
(3)This subsection applies if the lessee—
(a)has the use of the plant or machinery as a result of having incurred expenditure on its provision for purposes other than those of a qualifying activity, but
(b)brings the plant or machinery into use for the purposes of a qualifying activity on or after 1 April 2006.
(4)If subsection (3) applies, the starting value is the lower of—
(a)first use market value, and
(b)first use amortised market value.
(5)“First use market value” means the market value of the plant or machinery at the time when it is first brought into use for the purposes of the qualifying activity.
(6)“First use amortised market value” means the value that the plant or machinery would have at the time when it is first brought into use for the purposes of the qualifying activity on the assumption in subsection (7).
(7)That assumption is that the market value of the plant or machinery at the commencement of the term of the section 379 lease had been written off on a straight line basis over its remaining useful economic life.
(8)For the meaning of “qualifying activity”, “remaining useful economic life” and writing off on a straight line basis, see section 381(4), (3)(i) and (5) respectively.