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HMRC internal manual

Business Leasing Manual

From
HM Revenue & Customs
Updated
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Sale of lessor companies and similar arrangements: anti-avoidance: meaning of ‘relevant tax advantage’

Section 435 CTA2010

A company obtains a ‘relevant tax advantage’ if as a consequence of entering into the arrangement:

  • It is not regarded as carrying on a business of leasing plant or machinery.

This might happen because, for example, the arrangement results in the balance sheet value of the assets subject to leases being suppressed or the income from leasing being suppressed so that the answer to question A in section 434 is in the negative.

  • The amount of any income the company is treated as receiving is reduced.

This might happen, for example, because the balance sheet value of the plant or machinery on the balance sheet is suppressed so that the formula PM - TWDV gives a smaller figure than would be the case if the arrangement had not been entered into.

  • The amount of any expense the company is treated as receiving is increased.

This might happen, for example, because the balance sheet value of the plant or machinery on the balance sheet is increased so that the formula PM - TWDV gives a larger figure than would be the case if the arrangement had not been entered into. This might happen, for example, if the seller was loss-making and the purchaser could use the expense amount.

  • The amount of any disposal value substituted by section 398G(3) (disposal of plant or machinery by a ring fenced company) is reduced.

This might happen because the company has entered into an arrangement that artificially suppresses the value of the asset.