A Part I lease is subject to two principal computational
effects under FA97/Sch12. These are summarised briefly below but
are described in more detail in
BLM70801 (accountancy measure of
rentals) and
BLM73001 (capital allowances).
The first computational effect is that, in common with leases
to which Part II applies, the accountancy rental earnings from the
lease (the 'interest' on the 'loan' described as 'gross earnings'
from the lease under SSAP 21) are recognised for tax for any period
of account in which they exceed the rent taxable apart from
Schedule 12. This is subject to provisions intended to ensure that
ultimately the same sums are not brought into account for tax more
than once.
The second computational effect is that it is not possible to
side-step capital allowances balancing adjustments on exit from a
Part I lease by arrangements to dispose of the leased asset
indirectly. These rules do not apply to leases within Part II.
