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HMRC internal manual

Business Leasing Manual

’Income-into-capital’ schemes and back loaded leases: Back loaded leases: accountancy rental earnings - connected persons and consolidated accounts

Where the accounts of a connected person or consolidated group accounts are (or would be) drawn up for a different period from those of the lessor CTA10/S931 makes provision for a process of time apportionment, if necessary, to reach comparable figures. Such an exercise will not be necessary if in a particular case some more accurate method is available.

In practice, there is unusually no need to substitute figures from consolidated or connected person accounts. The need is most likely to arise in a case where the lessor’s own accounts correctly show the lease as an operating lease but where it is reclassified as a finance lease from the wider perspective of the group.