Income Tax Act 2007 section 809ZFA

Consideration for taking over payment obligations as lessee treated as income

Section 809ZFA treats as taxable income any consideration received by a person who agrees to take over another person's obligations as lessee under a plant or machinery lease, where that assumption of obligations gives rise to income tax deductions.

• Where a person within the charge to income tax agrees to take over lease obligations for plant or machinery and receives consideration for doing so, that consideration is treated as taxable income in the year the obligations are assumed
• The charge does not apply to the extent the consideration is already taxed as income, brought into account in calculating income, or treated as a disposal receipt under the Capital Allowances Act 2001
• The method by which the obligations are taken over is irrelevant — it could be by assignment, novation, contract variation, operation of law, or any other means
• This section takes precedence over any other priority rule in tax legislation, with the sole exception of the General Anti-Abuse Rule in section 212(1) of Finance Act 2013