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HMRC internal manual

Business Leasing Manual

HM Revenue & Customs
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‘Income-into-capital’ schemes and back loaded leases: Definition of a Chapter 2 of Part 21 of CTA 2010 lease: Condition D: when it must be satisfied

Unlike the other four conditions this condition need not be satisfied at the same time as the others. A lease satisfies the definition in CTA10/S902 if the other four conditions are simultaneously satisfied and the accountancy rental earnings exceed the normal rent (thus satisfying the condition in CTA10/S902(7)) either:

  • for the period of account in which the other conditions are satisfied; or
  • for an earlier period of account.

There is no requirement that the period of account in question must be on or after 26 November 1996. While a ‘period of account’ is generally defined as a period beginning on or after 26 November 1996 that restriction does not apply to the references to ‘period of account’ in CTA10/SS901-904 (CTA10/S932). But it is not of course possible to tax accountancy rental earnings accruing prior to 26 November 1996.

For the purposes of Part 21 of CTA 2010, including CTA10/S902, an actual period of account straddling or ending on that date is split into two notional periods of account, the first ending on 25 November 1996 and the second beginning on 26 November 1996 CTA10/S932(3).