The rules for recognising earnings for tax are the same for
both Parts I and II of Schedule 12. An important practical
consideration was that once the transitional period was over, the
targeting rules for Part I were no longer relevant for the purposes
of applying the new income recognition rules. If Part I's
conditions are not met for some reason, Part II always ensures that
earnings cannot be less than the commercial measure.
Part I rules nevertheless remain relevant for the purpose of
catching and dealing with attempts to avoid capital allowances
disposal adjustments. Schemes intended to turn income into capital
are also countered by changes in the capital allowances rules.
Allowances are not due for assets let under new leases of this kind
and allowances due under existing leases are subject to normal
disposal computations, even if an indirect disposal method is used.
See
BLM70220.
