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HMRC internal manual

Business Leasing Manual

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HM Revenue & Customs
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Sale of lessor companies and similar arrangements: business of leasing plant or machinery: meaning of carrying on a business of leasing plant or machinery - transactions on or after 23 March 2011

CTA2010 Sections 387 to 391

This guidance covers transactions where the relevant day (the day on which the company ‘changes hands’) is on or after 23 March 2011. For transaction before 23 March see BLM80112.

In most instances it will be obvious when a company is carrying on a business of leasing plant or machinery because that is all the company does. But to give certainty the legislation sets out two conditions. The company must satisfy one of these conditions in order to be carrying on a business of leasing plant or machinery:

Condition A: At least half of the company’s plant or machinery must be ‘leased out plant or machinery’. See BLM80115.

Condition B: At least half of the company’s income in a specified period must be derived from leasing. See BLM80160.

The conditions are tested on the relevant day. The relevant day is the day on which the company changes hands (that is, where there is a qualifying change of ownership). See also the anti-avoidance rules described at BLM82030 onwards.