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HMRC internal manual

Business Leasing Manual

‘Income-into-capital’ schemes and back loaded leases: Definition of a Chapter 2 of Part 21 of CTA 2010 lease: the five conditions to be satisfied simultaneously

The five conditions set out in BLM70415 have to be satisfied simultaneously (at the ‘relevant time’) although, in considering whether the fourth condition is satisfied, regard may be had not only to the period of account in which the relevant time falls but also an earlier chargeable period. The relevant time may be before 26 November 1996 (1996 Budget Day). Thus a lease which satisfies the five conditions at a relevant time before that date remains a Chapter 2 of Part 21 of CTA 2010 lease even if there is no subsequent point when it simultaneously meets the conditions.

Once it has satisfied those conditions a lease remains within Chapter 2 until it is terminated or assigned to (broadly) an unconnected person, as explained in BLM70680.