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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 CTA 2010 lease: Leasing partnerships

HMRC explained the approach to the application of these rules to partnerships (including partnerships containing individual members) in the article on FA97/Sch12 (now Part 21 of CTA 2010) in the April 1997 issue of Tax Bulletin:

We take the view that Schedule 12 should be applied to leasing partnerships at the partnership level (and not separately to each partner). The relevant ‘period of account’ is the partnership accounting period, as used for Sections 114/115 Income and Corporation Taxes Act 1988. The partnership profit relating to rental accruals, including any excess of the partnership rental earnings over the normal rent brought into account in the partnership computation, is then allocated to the partners in accordance with their partnership interests.`