Corporation Tax Act 2010 section 892

Deduction where failure to make relevant capital payment expected

Section 892 provides bad debt relief to a lessor where a capital payment that has already been taxed under the leasing rules is not expected to be received in full.

• Where a capital payment connected with a lease of plant or machinery has been treated as income under section 890, but the lessor reasonably expects the payment will not be made (in whole or in part), a deduction is available.
• The deduction is given in the period of account during which the lessor forms the reasonable expectation that the payment will not be received.
• The amount of the deduction equals the amount the lessor reasonably expects will not be paid.
• No other deduction is permitted in respect of the same expected non-payment, preventing any duplication of relief.