Corporation Tax Act 2010 section 897

Accountancy rental earnings

Section 897 defines "accountancy rental earnings" in respect of a lease, requiring the lessor to take the highest rental earnings figure from three possible sources for a given period of account.

• Accountancy rental earnings are the highest of three possible rental earnings figures for a period of account
• The three sources are: the lessor's own accounts, a connected person's accounts, and the consolidated group accounts
• Taking the highest figure ensures the full economic substance of the leasing transaction is taxed
• This is particularly important where capital sums forming part of a leasing arrangement are received by a related party rather than the lessor itself