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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: Condition B: connected persons

A sum does not cease to be a ‘major lump sum’ for the purposes of CTA10/902(5) just because it is paid to a connected person rather than the lessor. Were that the case it would be relatively straightforward matter to side-step the rules.

CTA10/S1122 defines “connected persons” for the purposes of CTA10. CTA10/S933 ensures that a person is to be regarded as connected with another person during a period of account even if there is no connection at that time. Thus, if a person is connected with another person at some time in the period which:

  • begins as soon as the leasing arrangements are made; and
  • ends when the lessor in question finally ceases to have any interest in the asset or related arrangements,

you should regard them as connected throughout that period.