In general, where chattels are leased, you should accept that
the leasing is by way of trade.
In exceptional cases, however, where the evidence of trading
is extremely slight, for example if only one asset has been
acquired for leasing and there is no personal involvement by the
taxpayer or any semblance of a trading organisation, the taxpayer's
activities may be special leasing within CAA01/S19.
You should not seek to deny trading treatment where, although
there is no personal involvement by the taxpayer, there is trading
activity by a manager as agent for the taxpayer.
The same principle applies to special purpose vehicle lessor
companies set up by groups that carry out leasing activities. In
such cases it is not unusual for the company to own only one (or a
few) assets and be managed by a group member.
Plant and machinery allowances may be due in connection with
special leasing. Compared with allowances available to traders,
there are more restrictions on the way non-trading allowances can
be used, see
CA29450
onwards.
