Capital Allowances Act 2001 section 70Y

Sale and leaseback, lease and leaseback etc: lessors

Section 70Y deals with sale and leaseback or lease and leaseback arrangements involving plant or machinery, ensuring that where the original transferor was already a lessor under a long funding lease, the leaseback and any intermediate leases are also treated as long funding leases.

• Where a person (B) transfers plant or machinery to another person (A) and leases it back, and B was already a lessor of that asset under a long funding lease immediately before the leaseback commenced, the leaseback is treated as a long funding lease for both A and B.
• If the leaseback from A to B is arranged indirectly through intermediate parties, all the leases used to effect that indirect leaseback are also treated as long funding leases for each party to them.
• The concept of "transfer" is broadly defined and includes any disposal, the grant of a lease, arrangements terminating one person's interest so another acquires it, and certain cessations of ownership relating to fixtures.
• The effect is to prevent sale and leaseback or similar restructuring from being used to circumvent the long funding lease rules where the plant or machinery was already subject to a long funding lease arrangement.