BLM74035 - Schedule 12 FA 1997: bad
debts: reducing cumulative accountancy rental excess - general
practical effect
In practice, the extent to which it will be necessary to
consider the bad debts provisions of FA97/Sch12/Para9 is limited by
the fact that, in many cases where the lessor cannot recover their
investment in the lease (and their return on that investment), the
lessor will be unable to make use of the cumulative accountancy
rental excess in respect of the lease. This will be the case
if:
- no subsequent normal rent will arise
against which to set the excess under Paragraph 6; and
- the asset will be sold for less than cost
and capital losses cannot normally arise on the disposal of an
asset qualifying for capital allowances (TCGA92/S41) so that the
quantum of paragraph 12 relief will be academic.
