Corporation Tax Act 2010 section 924

Post-25 November 1996 schemes to which Chapter 3 applied first

Section 924 provides continuity of reliefs when a finance lease changes status from being subject to the Chapter 3 rules (loan relationships) to the Chapter 2 rules (finance leases with a return in capital form).

• Where a lease initially falls under Chapter 3 and subsequently meets the conditions to come within Chapter 2, this section ensures a smooth transition between the two sets of rules.
• Any cumulative accountancy rental excess or cumulative normal rental excess that has built up during the Chapter 3 period is carried forward and counts for Chapter 2 purposes, preserving continuity.
• The legislation achieves this by treating Chapter 2 as if it had always applied during the period when Chapter 3 was actually in force.
• Where the lessor at an earlier time was an individual subject to income tax rather than corporation tax (for example, following an assignment of the lease), the equivalent income tax provisions in Part 11A of the Income Tax Act 2007 are treated as the relevant references instead.