Corporation Tax Act 2010 section 373

Other avoidance

Section 373 is an anti-avoidance provision that disapplies the special long funding lease rules for lessors (sections 360 to 369) where a lease forms part of a wider arrangement designed to create a substantial mismatch between accounting results and tax results.

• The long funding lease must form part of a wider arrangement that includes one or more other transactions (Condition A).
• A main purpose of the arrangement must be to create a substantial difference between the accounting total (GAAP total) and the corporation tax total over the lease period (Condition B).
• The difference must be wholly or partly attributable to the application of the long funding lease rules in sections 360 to 369 (Condition C).
• Where all three conditions are met, sections 360 to 369 are switched off for the lessor company, with supplementary rules in sections 374 and 375 governing the consequences.