Corporation Tax Act 2010 section 53

Leasing contracts and company reconstructions

Section 53 restricts the use of trade loss relief where a company claims first-year capital allowances on leased plant or machinery and arrangements exist for a successor company to take over the leasing obligations.

• Where a company leases plant or machinery on which it has claimed a first-year allowance, and arrangements are in place for a successor company to take over the leasing trade, the company's loss relief on that leasing contract is restricted.
• The restriction means that any losses from the leasing contract can only be set against profits arising from that same leasing contract — they cannot be relieved against the company's other profits or carried forward against other trade profits.
• A successor company is one that is either connected with the leasing company or is treated as a successor under the company reconstruction rules in Chapter 1 of Part 22 of the Act. Arrangements include any kind of arrangement, whether written or unwritten.
• For the purposes of calculating the losses and profits of the leasing contract, the contract is treated as if it were a separate trade in its own right, commencing when the letting under the contract began.