Capital Allowances Act 2001 section 228H

Sections 228A to 228G: supplementary

Section 228H provides supplementary definitions and rules that support the finance leaseback anti-avoidance provisions in sections 228A to 228G, including key definitions, the treatment of consideration, and requirements for accounts to comply with generally accepted accounting practice.

• Key terms are defined: "consideration" excludes rentals; "net book value" is based on depreciated book value ignoring revaluations and impairments; "S" excludes any assignee; and "termination" of a leaseback covers assignments, payment transfers to third parties, and variations causing the lease to lose finance lease status.
• Consideration for granting rights over plant or machinery to the buyer (B) excludes both rentals payable under the grant and certain capital payments already taxed as income under corporation tax or income tax rules; where only part of the consideration is excluded, the finance leaseback provisions apply with just and reasonable modifications.
• Where accounts are incorrect or have not been prepared, the finance leaseback rules apply as though correct accounts compliant with generally accepted accounting practice had been drawn up, and any figures referenced are those that would have appeared in such correct accounts.
• Where current-period accounts rely on figures carried forward from an earlier period for which correct accounts were not prepared, the figures used must be those that would have appeared had proper accounts been drawn up for that earlier period.