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HMRC internal manual

Business Leasing Manual

Sale of lessor companies and similar arrangements: change of ownership: exceptions to qualifying change of ownership: election out of charge: making the election

Section 398A and B CTA2010

This guidance applies where the relevant day falls on or after 9 December 2009 and before 23 March 2011.

The election must be made by the lessor company within 2 years of the relevant day It must state the date of the relevant day. It is irrevocable.

Where an election is made, the day after the relevant day marks the start of the “relevant period” - the period during which the restrictions apply.

The relevant period ends when there is next a qualifying change of ownership that results in the full, basic amount of income being brought into charge.

A change in one consortium member’s interest in a consortium company that carries on a leasing business would therefore not bring the relevant period to a close. Where there is such a change in ownership the legislation ensures that this is not treated as a qualifying change in ownership so that no charge or relief arises.

Thus, once an election has been made and the relevant period has started the company remains subject to restrictions until there is a sale of at least 75% of the shares in the company.

Where there is a further qualifying change in ownership and the relevant day falls before 23 March 2011 it is open to the company to make a further election.

If no election has been made, it is now too late to make one.