Income Tax Act 2007 section 614BX

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

Section 614BX deals with finance leases that form part of a pre-26 November 1996 scheme but where the conditions bringing the lease within the finance lease rules are only met after that date, requiring a catching-up tax charge on accumulated untaxed rental income.

• Where a lease is part of a pre-26 November 1996 scheme but the relevant conditions are met later, the lessor's accounting period is split into three notional periods around the date the conditions are satisfied
• Any accumulated excess of accountancy-measured rental income over actually taxed income from 26 November 1996 onwards is calculated and treated as additional taxable rent in the period immediately before the conditions are met
• This catching-up charge only covers the period from 26 November 1996 to the date the conditions are met — earlier periods are not reopened
• Where the lessor was at any earlier time within the charge to corporation tax rather than income tax, the equivalent corporation tax provisions in CTA 2010 are also taken into account when calculating the accumulated excess