Capital Allowances Act 2001 section 228G

Leaseback not accounted for as finance lease in S's accounts

Section 228G deals with how the finance leaseback rules apply when the leaseback is not treated as a finance lease in the seller's (S's) own accounts, and sets out alternative approaches depending on whether a connected person accounts for it as a finance lease.

• Where S does not account for the leaseback as a finance lease, the normal rules in sections 228B and 228C are modified or disapplied.
• If a connected person does account for the leaseback as a finance lease, the figures from that connected person's accounts are used instead of S's for the relevant calculations.
• If neither S nor any connected person accounts for the leaseback as a finance lease, sections 228B and 228C do not apply at all — but for leasebacks starting on or after 18 May 2004, S's income or profits are instead increased by the full consideration received for granting the leaseback rights.
• A leaseback is treated as accounted for as a finance lease if, under generally accepted accounting practice, it (or the wider arrangements it forms part of) falls to be treated as a finance lease or loan.