Part 19

Sale and lease-back etc
Chapter 4

Leased assets: capital sums

Charge to corporation tax

Charge to corporation tax
874
1
The company obtaining the capital sum is to be treated as receiving, at the time the sum is obtained, an amount—
a
which is equal to the chargeable amount, and
b
to which the charge to corporation tax on income applies.
2
The chargeable amount is—
a
the amount of the payment for which a deduction by way of relevant tax relief is allowed, or
b
the total amount of such payments (if more than one).
3
But subsections (1) and (2) have effect subject to—
a
subsections (4) to (7), and
b
section 875(3) (hire-purchase agreements).
4
The chargeable amount is not to exceed the capital sum (but see section 875(4)).
5
Subsection (6) applies if—
a
the charge to corporation tax on income is applied by this section in respect of a capital sum, and
b
a payment or part of a payment is taken into account in deciding the chargeable amount in respect of the sum.
6
The payment or part must be left out of account in deciding—
a
whether the charge to corporation tax on income is to be applied by this section in respect of another capital sum, and
b
the chargeable amount in respect of the other sum (if the charge is to be applied in respect of the other sum).
7
The order in which subsections (5) and (6) are applied is the order in which capital sums are obtained.