Corporation Tax Act 2010 section 437A

Determining the ascribed value of plant and machinery

Section 437A sets out how to determine the "ascribed value" of plant or machinery at a given point in time for the purposes of the sales of lessors rules.

• Where plant or machinery is subject to a lease and the company or partnership is the lessor, the ascribed value is the higher of market value and the present value of the lease.
• A special rule applies to equipment leases involving fixtures under Chapter 14 of Part 2 of CAA 2001, where the lessor is treated as owner through an election — in that case the ascribed value is simply the present value of the lease.
• The present value of the lease rather than market value is used for fixture equipment lessors because the election mechanism already establishes the lessor's ownership position through the capital allowances code.
• If the plant or machinery is not subject to any lease at the relevant time, the ascribed value defaults to its open market value.