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HMRC internal manual

Capital Allowances Manual

From
HM Revenue & Customs
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PMA: Fixtures: Cessation of ownership: incoming lessee, severance, equipment lessor

CAA01/S190 - S192

Sometimes an incoming lessee is treated as the owner of a fixture CA26350.The lessor is treated as ceasing to be the owner of the fixture when the lessee begins to be treated as the owner. This means that the lessor has to bring a disposal value inrespect of a fixture to account when the lessee begins to be treated as its owner.

A fixture may be permanently severed from the relevant land. If so, it ceases to be afixture. If a fixture was treated as belonging to any person before it was permanently severed from the relevant land, it is treated as ceasing to belong to that person unless it then actually belongs to that person.

Example As in the example at CA26250 Budokan Computers is the tenant of Kane House and installs air conditioning that becomes afixture. If the air conditioning is removed from Kane House, it is treated as ceasing to belong to Budokan Computers unless it actually belongs to Budokan Computers after its removal.

Where an equipment lessor has been treated as the owner of a fixture because of a CAA01/S177 election CA26200 the equipment lessor is treated asceasing to own the fixture at the earliest of these events:

  • The rights of the equipment lessor under the equipment lease are assigned.
  • The financial obligations of the lessee under the equipment lease are discharged, whether on the payment of a capital sum or otherwise.