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HMRC internal manual

Business Leasing Manual

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


The test to establish whether a company is carrying on a business of leasing plant or machinery focuses on the proportion of the plant or machinery that is leased out plant or machinery.

Plant or machinery is leased out plant or machinery if it has been leased out by the relevant company or by a ‘qualifying associate’ of the relevant company in the last 12 months.

The test extends to consider how plant or machinery has been used in the last 12 months by the company and its qualifying associates to prevent groups from setting up a new company and transferring into that new company plant or machinery that has been leased out in the past by other group companies.

An associate is a person connected with the company. ‘Connected’ takes its meaning from S1122 CTA2010 but is specifically extended in the case of a lessor company that is owned by a consortium or is a 75% subsidiary of a company owned by a consortium.

The definition includes entities other than companies but, in most cases, we are concerned with companies that are in the same group.

A ‘qualifying associate’ is a person that is an associate at the start of the day or at any point in a period of 12 months.