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HMRC internal manual

Business Leasing Manual

’Income-into-capital’ schemes and back-loaded leases: 'Income-into-capital' schemes: other features

‘Income-into-capital’ schemes may include the following further features:

  • the asset is sold by one member of the Borrower group and leased back to another;
  • where the leased asset is real property, very occasionally the purchase option is not over the asset but over the shares in the Bank’s leasing subsidiary (which is formed just for the purpose of holding the property) - see BLM70475;
  • the purchase option is held by another member of the Borrower’s group (that is, neither the original seller nor the lessee).

The third variation above was common because it gave the Borrowing group indirect relief for the interest on the capital sum. Further details about this are at BLM71401 onwards.