BIM61205 - Leasing: avoidance: assets other than land: ICTA88/S781

ICTA88/S781 deals with the case of a taxpayer who:

• having had tax relief (see BIM61210) in respect of a payment under a lease of an asset other than land or buildings,
• receives or has received at any time a capital sum (see BIM61215) in respect of the lessee’s interest in the lease.

The amount on which relief has been obtained, or, if less, the capital sum, is charged with tax under:

• Case VI of Schedule D for CT cases (and IT cases up to 2004/05), or
• ICTA88/S781 (1) for IT cases (for 2005/06 onwards)

for the year of receipt of the capital sum.

Where receipt of the capital sum preceded the relieved payment, the normal time limit for adjustment by assessment or otherwise is extended to:

• for CT, six years from the end of the accounting period, and
• for IT, the fifth anniversary of the 31 January next following the tax year

in which the relieved payment was made - ICTA88/S781 (8A).

Section 781 does not apply:

• to leases entered into on or before 14 April 1964, or
• to leases within ICTA88/S782 (see BIM61240).