Corporation Tax Act 2010 section 407

Migration

Section 407 prevents a company that migrates to the United Kingdom from generating a leasing expense deduction in its first accounting period where a qualifying change of ownership occurs on the same day, in respect of plant or machinery already held before migration.

• The section applies when a company begins to be within the charge to UK corporation tax in respect of a plant or machinery leasing business on the same day as a qualifying change of ownership occurs.
• The leasing business must be carried on by the company on its own, not as part of a partnership.
• Any plant or machinery that would have appeared on the company's balance sheet drawn up under generally accepted accounting practice immediately before the day of migration must be excluded from the income calculation on that day.
• The effect is to prevent the company from claiming a deduction for leasing costs on pre-existing plant or machinery that it already held before entering the UK tax regime.