Part 21

Leasing arrangements: finance leases and loans
Chapter 2

Finance leases with return in capital form

Introduction

Arrangements to which this Chapter applies
899
1
This Chapter applies to arrangements involving the lease of an asset that meet conditions A and B.
2
Condition A is that in accordance with generally accepted accounting practice the arrangements fall to be treated as a finance lease or loan.
3
Condition B is that the effect of the arrangements is that some or all of the return on investment in respect of the finance lease or loan—
a
is or may be in the form of a sum that is not rent, and
b
would not, apart from this Part and Part 11A of ITA 2007, be wholly brought into account for tax purposes as rent from the lease of the asset.
4
It does not matter—
a
when the arrangements are or have been entered into, or
b
whether they are or have been entered into by companies or other persons.