Explanatory Notes

Corporation Tax Act 2010

2010 CHAPTER 4

3 March 2010

Introduction

Part 20: Tax avoidance involving leasing plant or machinery

Chapter 2: Capital payments in respect of leases treated as income

Section 890: Capital payments in respect of leases treated as income

2636. This section taxes certain capital receipts arising in connection with leases of plant or machinery (such as premiums and similar sums) as income of the lessor. It is based on section 785B of ICTA.

2637. The accounting period in which the charge to tax arises depends upon whether or not an unconditional obligation to make a “relevant capital payment” (see section 893) is entered into before the relevant capital payment is made. See subsections (3) and (4).