Income Tax Act 2007 section 614CB

Leases to which this Chapter applies

Section 614CB sets out the conditions that must be met for Chapter 3 (which deals with finance leases where the return is partly in a capital form) to apply to a particular lease.

• The chapter applies to leases of any asset granted on or after 26 November 1996, provided the lease forms part of a post-25 November 1996 scheme, condition A (the accountancy-based finance lease test) has been met, but not all of the other conditions in Chapter 2 have been met — meaning Chapter 2 itself does not apply
• Once condition A has been satisfied for any lessor at any time, it is treated as continuing to be met for all subsequent lessors unless the asset ceases to be leased or the lessor's interest is assigned to a person who is wholly unconnected with the assignor, any previous lessor, or anyone who later becomes lessor under pre-assignment arrangements
• The chapter does not apply where the lease is a long funding lease of plant or machinery under Part 2 of the Capital Allowances Act 2001, because those leases have their own separate regime where the lessee rather than the lessor receives capital allowances
• Where a previous lessor was within the charge to corporation tax, the equivalent corporation tax conditions in sections 901 and 902 of the Corporation Tax Act 2010 are treated as meeting the corresponding income tax conditions, ensuring continuity when a lease moves between the two tax regimes