Finance Act 2021

17 Extensions of plant or machinery leases for reasons related to coronavirus

(1) In Part 2 of CAA 2001, Chapter 6A (interpretation of provisions about long funding leases) has effect subject to the following modifications.

(2) Section 70YB (long funding operating lease: extension of term of lease) has effect as if, in subsection (1), at the beginning there were inserted “Subject to section 70YCA (extension of term of lease for reasons related to coronavirus),”.

(3) Section 70YC (extension of term of lease that is not a long funding lease) has effect as if, in subsection (1), at the beginning there were inserted “Subject to section 70YCA (extension of term of lease for reasons related to coronavirus),”.

(4) That Chapter has effect as if after section 70YC there were inserted—

“70YCA Extension of term of lease for reasons related to coronavirus

(1) Sections 70YB(1) and 70YC(1) (extension of lease terms) do not apply in any case where subsection (2) applies (but see subsection (3)).

(2) This subsection applies where, in relation to a relevant lease—

(a) on or after 1 January 2020, there is (or was) a change in the payments under the lease that would have been payable on or before 30 June 2021,

(b) the effect of the change is that the term of the lease is extended (and, were it not for this section, section 70YB(1) or 70YC(1) would apply),

(c) the change would not have been made if it were not for coronavirus,

(d) after the change, the consideration for the lease is substantially the same as, or less than, the consideration for the lease before the change,

(e) there is no other substantive change to the terms of the lease, and

(f) the lessor and lessee have not made any arrangement in connection with any changes to capital allowances relating to the lease and arising as a result of the change mentioned in paragraph (a).

(3) But subsection (2) does not apply where, in relation to a relevant lease, the lessor or the lessee elects that subsection (2) does not apply.

(4) The Treasury may by regulations substitute for the second date for the time being specified in subsection (2)(a) such other date as they consider appropriate.

(5) In this section—

• “coronavirus” has the same meaning as in the Coronavirus Act 2020 (see section 1(1) of that Act);

• “relevant lease” means—

  (a)

  a long funding operating lease, or

  (b)

  a plant or machinery lease that is not a long funding lease.

70YCB Elections under section 70YCA

(1) An election under section 70YCA must be made by notice to an officer of Revenue and Customs no later than the end of the period of 21 months beginning with the day after the day on which the change mentioned in section 70YCA(2)(a) occurred.

(2) But an election under that section is of no effect unless—

(a) the party making the election notifies the other party to the lease of the election, and

(b) the notice under subsection (1) is accompanied by a copy of the notification given to the other party.

(3) A notice under subsection (1) must include such information as may be specified (whether generally or specifically) by an officer of Revenue and Customs.

(4) An election under section 70YCA is irrevocable.

(5) Where a party to the lease makes or amends a tax return for a period in which the change mentioned in section 70YCA(2)(a) occurred, that party must include with that return or amended return a copy of any election made under that section in respect of the lease.

(6) The following provisions do not apply to an election under section 70YCA—

(a) section 42 of, and Schedule 1A to, TMA 1970 (claims and elections for income tax purposes);

(b) paragraphs 54 to 60 of Schedule 18 to FA 1998 (claims and elections for corporation tax purposes).

(7) References in this section to a tax return, in the case of an election for the purposes of a trade, profession or business carried on by persons in partnership, are to be read, in relation to those persons, as references to a return under section 12AA of TMA 1970 (partnership returns).”