The concept of 'qualifying leased plant or machinery' is set
out through a series of tests.
'Expenditure is incurred' is extended to include expenditure
that is 'treated as incurred' such as future payments under a hire
purchase contract where the asset has been brought into use.
‘Plant or machinery’ has the same meaning as it
does in Part 2 of CAA 2001 so that if the expenditure on the asset
would qualify for plant or machinery allowances then it is plant or
machinery.
‘Entitled to capital allowances’ is determined
without taking into consideration the effect of sections 34A and
70A of CAA 2001 which transfer entitlement to capital allowances
from the lessor to the lessee where the lease is a long funding
lease (see BLM20000 onwards) and is independent of whether a claim
to allowances has been made. Thus, all plant or machinery is taken
into account for this test, whether the lessor is actually entitled
to claim capital allowances or not.
‘Plant or machinery lease’ has the same meaning
as in Chapter 6A of Part 2 of CAA 2001 (CAA01/S70K, see BLM20130)
and excludes a lease that is a lease of background plant or
machinery (CAA01/s70R, see BLM21300).Background plant or machinery
is excluded from the calculation because that type of plant or
machinery is integral to the functioning of a building as a usable
space. Without the exclusion a commercial property lessor could
fall within the scope of Schedule 10. For example, if a company
only owns an office block that is leased out, then its plant or
machinery would be leased. The exclusion for background plant or
machinery ensures that this type of company does not fall within
Schedule 10.
