Part 2

Plant and machinery allowances
Chapter 6

Hire-purchase etc. and plant or machinery provided by lessee

Plant or machinery provided by lessee

Plant or machinery provided by lessee
70
1
This section applies if—
a
under the terms of a lease, a lessee is required to provide plant or machinery,
b
the lessee incurs capital expenditure on the provision of that plant or machinery for the purposes of a qualifying activity which the lessee carries on,
c
the plant or machinery is not so installed or otherwise fixed in or to a building or any other description of land as to become, in law, part of that building or other land, and
d
the lessee does not own the plant or machinery.
2
The lessee—
a
is to be treated as being the owner of the plant or machinery, as a result of incurring the capital expenditure, for so long as it continues to be used for the purposes of the qualifying activity, but
b
is not required to bring a disposal value into account because the lease ends.
3
Subsection (4) applies if—
a
the plant or machinery continues to be used for the purposes of the lessee’s qualifying activity until the lease ends,
b
the lessor holds the lease in the course of a qualifying activity, and
c
on or after the ending of the lease, a disposal event occurs in respect of the plant or machinery at a time when the lessor owns the plant or machinery as a result of the requirement under the terms of the lease.
4
The lessor is required to bring a disposal value into account in the appropriate pool for the chargeable period in which the disposal event occurs.
5
“The appropriate pool” means the pool which would be applicable under this Part in relation to the lessor’s qualifying activity if—
a
the expenditure incurred by the lessee had been qualifying expenditure incurred by the lessor, and
b
that qualifying expenditure were being allocated to a pool for the chargeable period in which the disposal event occurs.
6
In this section “lease” includes—
a
an agreement for a lease if the term to be covered by the lease has begun, and
b
any tenancy,
but does not include a mortgage (and “lessee” and “lessor” are to be read accordingly).