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HMRC internal manual

Business Leasing Manual

‘Income-into-capital’ schemes and back loaded leases: Back loaded leases: negative depreciation - new leases

HMRC commented on the application of FA97/Sch12/Para 5 (now CTA10/S928) to new leases within Part II (now Chapter 3 of Part 21 CTA 2010) in the article on Schedule 12 (now Part 21 of CTA 2010) published in the April 1997 issue of Tax Bulletin:

`In the case of new leases to which Part II (now Chapter 3) does apply, we take the view that ‘negative depreciation’ is taxable primarily by virtue of paragraph 5 of Schedule 12 (as applied to Part II (Chapter 3) by paragraph 16 of Schedule 12 (now CTA10/S927)) and not under general tax law. This will ensure that relief for ‘cumulative accountancy rental excess’ will be available in accordance with the Schedule’.