Corporation Tax Act 2009 section 58B

Connected persons: application of section 56

Section 58B prevents the car hire expense restriction from being applied more than once when connected persons are involved in a chain of leases for the same car over the same period.

• Where connected persons each incur expenses on hiring the same car for the same period, the car hire expense restriction applies only once across the chain of arrangements
• The restriction applies to the expenses of the first "commercial lessee" in the chain — that is, the first person whose lease terms reflect what independent parties dealing at arm's length would have agreed
• If there is only one commercial lessee in the chain, the restriction applies solely to that person's expenses; all other connected persons' expenses are unaffected by the restriction
• A commercial lessee's expenses are counted regardless of the capacity in which they were incurred, and "commercial arrangements" means terms that would reasonably be expected between parties negotiating independently