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HMRC internal manual

Business Leasing Manual

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HM Revenue & Customs
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Taxation of long funding leases: Long funding lessors: Anti avoidance provisions - introduction

Due to the disclosure of a number of avoidance schemes, aimed at creating tax losses where there was actually a commercial profit, anti avoidance provisions were introduced.

Sections 370-371 and 373-375 CTA 2010

These sections are effective, on or after 9 October 2007, for both long funding operating and finance leases. The broad aim is to stop the application of CTA10/Ss360-369, when either:

  • the lessor is able to obtain a trading deduction for the cost of the leased asset (CTA10/S370-371), or
  • the arrangements are entered into with a view to exploiting the long funding lease rules to generate tax losses where there are no commercial losses (CTA10/S373-375).

For accounting periods ending before 1 April 2010

This legislation was previously located at s.502GA and s.502GC ICTA 88 and stopped the application of S502B to S502G ICTA 88. Both of these sections were effective, on or after 9 October 2007, for both long funding operating and finance leases.

Section 372 CTA 2010

This section was introduced to counter disclosed avoidance schemes for mismatched chains of leases. It is generally effective for leases entered into on or after 13 December 2007. Further details can be found at BLM63010.

For accounting periods ending before 1 April 2010

This legislation was previously located at s.502GB ICTA 88 and stopped the application of S502B to S502G ICTA 88. It was effective for leases entered into on or after 13 December 2007.

The parallel provisions for Income Tax purposes in ITTOIA 2005 are:

Sections 370-371 CTA 2010 Section 148FA ITTOIA 2005
   
Sections 373-375 CTA 2010 Section 148FC ITTOIA 2005
Section 372 CTA 2010 Section 148B ITTOIA 2005