A person may acquire an existing interest in land that includes
a fixture previously let under an equipment lease. If the person
pays a capital sum to discharge the obligations of the equipment
lessee under the equipment lease in connection with the
acquisition, the fixture is treated as belonging to that person in
consequence of incurring that expenditure.
This does
not apply if immediately after the acquisition
there is somebody else who holds an another interest in any land in
which all or part of the relevant land is comprised and the person
holding that interest has a prior right
CA26250 in relation to the fixture.
Example In the example at
CA26200, the Redding Lift Company, an
equipment lessor, leases a lift to Budokan Computers. Budokan
Computers assigns its lease to Zanzibar Ltd. If Zanzibar Ltd pays
£10,000 to the Redding Lift Company to discharge Budokan
Computers' obligations under the lease, Zanzibar Ltd. can claim
capital allowances on that £10,000 (restricted to Redding's
disposal value
CA26400). However, Zanzibar Ltd. will not
be able to claim capital allowances if there is a person with a
prior right to allowances in respect of the lift.
