Example
The point at
BLM74005 can best be illustrated by an
example. Assume the following position for the first two accounting
periods relating to a continuing finance lease to which Schedule 12
applies.
| Year | Accountancy rental earnings | Normal rents | Bad debt reduction |
| 1 | 1000 | Nil | Nil |
| 2 | 1000 | 1000 | 2000 |
In the absence of provisions in Schedule 12 restricting the
cumulative accountancy rental excess, the excess available to carry
forward at the end of year 2 would be 1000 even though, net of bad
debt relief, no rents have been taxed.
