Part 9Leasing plant or machinery

Chapter 2Long funding leases of plant or machinery

Interpretation

381Interpretation of Chapter

1

Chapter 6A of Part 2 of CAA 2001 (interpretation of provisions about long funding leases) applies in relation to this Chapter as it applies in relation to that Part.

2

Accordingly—

  • “the finance lease test” means the finance lease test in section 70N of CAA 2001,

  • “long funding lease” has the meaning given by section 70G of that Act,

  • F1“long funding finance lease” means—

    1. a

      in relation to any person, a long funding lease that meets the finance lease test as a result of section 70N(1)(a) of that Act, or

    2. b

      in relation to a lessee, a right-of-use lease (see section 70YI(1) of that Act) which is a long funding lease—

      1. i

        that meets the lease payments test in section 70O of that Act or the useful economic life test in section 70P of that Act, but

      2. ii

        is not a lease that, before a relevant change of classification (see section 70YA(11) of that Act), was a long funding operating lease;

  • “long funding operating lease” means a long funding lease that is not a long funding finance lease.

3

As to the meaning of the following other expressions used in this Chapter and defined in Chapter 6A of Part 2 of CAA 2001, see—

a

for “commencement”, in relation to the term of a lease, section 70YI(1) of that Act,

b

for “inception”, section 70YI(1) of that Act,

c

for “lease”, section 70YI(1) of that Act,

d

for “lessee”, section 70YI(1) of that Act,

e

for “lessor”, section 70YI(1) of that Act,

f

for “market value”, in relation to plant or machinery, section 70YI(2) of that Act,

g

for “plant or machinery”, in relation to a lease, section 70YI(3) of that Act,

h

for “plant or machinery lease”, section 70YI(1) of that Act,

i

for “remaining useful economic life”, section 70YI(1) of that Act,

j

for “the term”, in relation to a lease, section 70YI(1) of that Act,

k

for “termination”, section 70YI(1) of that Act,

l

for “termination amount”, section 70YG of that Act, and

m

for “termination value”, section 70YH of that Act.

4

In this Chapter—

  • “qualifying activity” has the same meaning as in Part 2 of CAA 2001, and

  • “residual value”, in relation to any plant or machinery leased under a long funding operating lease, means—

    1. a

      the estimated market value of the plant or machinery on a disposal at the end of the term of the lease, less

    2. b

      the estimated costs of that disposal.

5

Any reference in this Chapter to a sum being written off on a straight line basis over a period of time (the “writing-off period”) is a reference to—

a

the sum being apportioned between each of the periods of account in which any part of the writing-off period falls,

b

that apportionment being made on a time basis, according to the proportion of the writing-off period that falls in each of the periods of account, and

c

the sum being written off accordingly.