Corporation Tax Act 2010 section 285A

Restriction on hire etc. of relevant assets to be brought into account

Section 285A limits how much a ring fence trade company can deduct for lease payments on assets used in offshore oil contractor services, by imposing a "hire cap" on allowable amounts within ring fence profits.

• Lease payments for assets used in oil contractor offshore services are capped (the "hire cap") when calculating a company's ring fence profits, based on a relevant percentage of the asset's total cost (TC)
• Where more than one company makes lease payments for the same asset, the hire cap is shared between them on a just and reasonable basis, reflecting each company's relative contribution
• Any lease payments exceeding the hire cap may be deducted from the company's non-ring-fence total profits, or surrendered as group relief to other group companies, but cannot reduce ring fence profits or contractor's ring fence profits
• A targeted anti-avoidance rule applies: if the company or an associated person enters into arrangements whose main purpose (or one of whose main purposes) is to circumvent the hire cap, the restriction will apply regardless