Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Business Leasing Manual

From
HM Revenue & Customs
Updated
, see all updates

Sale of lessor companies and similar arrangements: business of leasing plant or machinery: adjustments to the balance sheet figures: plant or machinery assets acquired during the relevant day- transactions on or after 13 November 2008

Section 389 CTA2010

This guidance covers transactions where the relevant day is on or after 13 November 2008.

The balance sheet figure is adjusted to include an amount in respect of plant or machinery that would have been reflected on the balance sheet of an associated company at the start of the relevant day.

These amounts would not be reflected in the balance sheet of the lessor company at the start of the day and could have a significant effect on the operation of the test. See BLM80130.

Where the lessor company acquires assets during the relevant day and at the end of the day it is:

  • the lessee of the plant or machinery under a long funding finance lease; or
  • the lessee of plant or machinery under a long funding operating lease; or
  • is treated as the owner of the plant or machinery under a hire purchase or similar contract

any amount included in the total balance sheet figure is removed. If the relevant day falls before 23 March 2011 the market value of the plant or machinery is substituted. If the relevant day falls on or after 23 March 2011 the ascribed value of the plant or machinery is substituted.

Associated companies are defined in section 408 as companies where one has control of the other or both are under the control of the same person. Control takes its meaning from section 1124 CTA2010..

This is extended to cover members of the consortium when:

  • the lessor company is a company owned by a consortium or a 75% subsidiary of a company owned by a consortium;
  • there is a change of ownership of the lessor company that involves a member of the consortium.

In this situation the meaning of associated company extends to cover any member of the consortium and any company associated with a member of a consortium when the changes in relation to that member. See example at BLM80135.