In some instances the assets to be leased back may be sold
for more than original cost, the sale proceeds either being taken
into account in computing chargeable gains and covered by otherwise
unrelieved capital losses, or not taxable at all. This is a feature
of some of the more tax orientated arrangements. These cases should
be reviewed carefully not only to consider the treatment of the
sale proceeds, but also the rents under the lease-back. It may be,
for example, that any excess of sale proceeds over cost effectively
escapes taxation because the gain is sheltered by reliefs or
capital losses. Prior to FA 2004, the capital element of the
rentals is, however, likely to be allowable as a deduction in
computing profits.
Where significant amounts are at stake, particularly where
you have concerns over the valuation of the assets, you may seek
further guidance from CT & VAT (Technical).
