BLM20105 - Defining long funding leases: basic definition: CAA01/S70G
The legislation in CAA01/S70G (1) takes a staged approach to
defining a long funding lease.
A long funding lease is
There are special rules where the lease is of a qualifying ship
to a tonnage tax company.
Exclusions from the definition of a funding lease are
described at
BLM20405. If you are not familiar with
these exclusions it may be worth studying these first because,
where they apply, there is no need to consider whether the lease is
a funding lease.
The definition of a long funding lease applies equally to
lessors and lessees. However, a lessor may also elect for leases
that would not otherwise be long funding leases to be treated as
long funding leases. Guidance on this election is at
BLM24000.
In the case of a lessee, a lease that meets the definition of
a long funding lease need not be treated as a long funding lease,
see
BLM20120.
In general, the tests for determining whether a lease is a
long funding lease are carried out at inception. However, when the
plant or machinery that is leased (whether by lessor or lessee) is
not used for the purpose of a qualifying activity (as defined in
CAA01/S15, see CA20010) at commencement but is subsequently brought
into use for a qualifying activity it will be necessary to
determine whether the lease is a long funding lease or not. This
may happen, for example, where a lease is entered into by a
business whilst outside the UK but which then moves to the UK.
Further guidance is at
BLM20110.
