Corporation Tax Act 2010 section 923

Pre-26 November 1996 schemes where this Chapter does not at first apply

Section 923 deals with finance leases that form part of schemes established before 26 November 1996, where the conditions bringing them within the finance lease rules are not met until after that date, and provides a mechanism for catching up on untaxed accumulated rental income.

• Where a lease is part of a pre-26 November 1996 scheme but only meets the qualifying conditions after that date, a catching-up charge applies to recover any accumulated excess of accountancy rental income over income actually taxed in earlier periods
• Three notional periods of account are created around the moment the conditions are met: one ending just before, a brief one spanning the moment itself, and one beginning immediately after
• The cumulative accountancy rental excess as at the moment the conditions are met is treated as additional rent arising to the lessor in the period immediately before that moment, and is taxable as such for corporation tax purposes
• This additional rent is on top of any other lease rent for that period but is excluded from the ongoing accountancy rental earnings calculation under section 905, and no excess relating to periods before 26 November 1996 can be caught up in this way