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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: adjustments to the balance sheet figures: ascribed value of plant or machinery assets

Section 437A CTA2010

In some circumstances, the legislation requires that the company uses the ascribed value of a plant or machinery asset rather than the balance sheet value.

The ascribed value depends on the circumstance.

Where the asset is subject to a plant or machinery lease and the relevant company is the lessor, then

The ascribed value is the higher of:

  • The market value of the plant or machinery: or
  • The present value of the lease. See BLM80148 

Where the asset is a fixture subject to an equipment lease and the relevant company is the equipment lessor the ascribed value is the present value of the lease.

Where the asset is not subject to a lease the ascribed value is the market value of the plant or machinery at the relevant time.

The market value of plant or machinery is determined on the assumption that the asset is sold by an absolute owner free of all leases and encumbrances. If the asset is a fixture then the market value is determined on a just and reasonable basis taking into consideration the value of the relevant land and the fixture together.

In most cases, the ascribed value of an asset will be similar to the value reflected on the balance sheet.