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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 before 23 March 2011

FA06/Sch10/Para6

This guidance covers transactions where the relevant day (the day on which the company ‘changes hands’) is before 23 March. For transaction on or after 23 March 2011 see BLM80110.

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 ‘qualifying leased 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.