Taxation (International and Other Provisions) Act 2010 section 472

Finance leases granted before 20 March 2017

Section 472 provides a grandfathering exclusion for finance leases entered into before 20 March 2017, so that they are not caught by the related-party rules within the corporate interest restriction regime.

• This section applies where an asset is leased from one person (A) to another (B) under a lease granted before 20 March 2017 that is classified as a finance lease in the hands of B.
• Where the section applies, A and B are treated as if they are not related parties of each other for the purposes of Part 10 of the Act (the corporate interest restriction rules).
• This treatment applies to everything done under or for the purposes of the lease, effectively grandfathering pre-existing finance lease arrangements from the related-party provisions.
• The practical effect is that interest or financing costs arising under qualifying pre-20 March 2017 finance leases are not subject to the more restrictive rules that apply to related-party debt.