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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 D: definition of rental earnings

For any period of account, ‘rental earnings’ are the ‘amount which falls for accounting purposes to be treated in accordance with GAAP as the gross return for that period on investment in respect of a finance lease’ (or loan)’ (CTA10/S898).

The references to accounting purposes and practice are subject to CTA10/S935 and the definition of ‘accounting purposes’ in CTA10/S937. The effect is to focus on what is correctly shown as the gross return on investment under GAAP. In practice, that will normally be the ‘gross earnings’ as defined in paragraph 28 of SSAP21, and ‘finance income’ in FRS101, FRS102 and IFRS. The use of consolidated accounts and those of connected persons is explicitly dealt with in CTA10/S897 - see BLM70585.