Corporation Tax Act 2010

387 “Business of leasing plant or machinery”

(1) This section determines for the purposes of this Chapter whether, on any day (“the relevant day”), a company (“the relevant company”) carries on a business of leasing plant or machinery.

(2) A business carried on by the relevant company is a business of leasing plant or machinery on the relevant day if condition A or B is met.

(3) Condition A is that at least half of the relevant plant or machinery value relates to qualifying leased plant or machinery.

(4) Subsection (3) is supplemented by section 388.

(5) Condition B is that at least half of the relevant company’s income in the period of 12 months ending with the relevant day derives from qualifying leased plant or machinery.

(6) Subsection (5) is supplemented by section 391.

(7) For the purposes of this Chapter, plant or machinery is “qualifying leased plant or machinery”, in relation to a company, if—

(a) expenditure is incurred (or treated as incurred) by the company on the provision of the plant or machinery wholly or partly for the purposes of the business,

(b) the company would be (or would at any time have been) entitled, on the assumptions in subsection (8), to an allowance under Part 2 of CAA 2001 in respect of that expenditure, and

(c) at any time in the period of 12 months ending with the relevant day the plant or machinery has been subject to a plant or machinery lease which is not an excluded lease of background plant or machinery for a building (see section 437(3)).

(8) The assumptions are—

(a) that sections 34A and 70A of CAA 2001 (lessees, and not lessors, under long funding leases to be entitled to capital allowances) are ignored, and

(b) that any claim that could be made for an allowance under Part 2 of that Act is made.