Capital Allowances Act 2001 section 221

Meaning of "sale and finance leaseback"

Section 221 defines when plant or machinery is the subject of a "sale and finance leaseback" for the purposes of the anti-avoidance rules in this chapter.

• A sale and finance leaseback arises where a buyer enters into a relevant transaction with a seller, and the plant or machinery continues to be used by the seller or a connected person after the transaction, with that continued use being possible because it has been leased back under a finance lease.
• The continued use after the transaction can be for the same activity, a qualifying activity (provided the asset has not been used for another qualifying activity apart from leasing), or a non-qualifying activity (again, provided it has not been used for a qualifying activity apart from leasing).
• The "date of the transaction" is the date of the sale, the making of the contract, or the assignment that constitutes the relevant transaction.
• A "qualifying activity" for these purposes includes any activity that would normally qualify for plant and machinery allowances, even if the profits from it are not actually chargeable to tax.