CFM6820 - Taxing loan relationships: structured finance arrangements: section 785A and section 744A-D

Interaction with section 785A

Section 774A to 774D take priority over section 785A ICTA 1988 (see the guidance on rent factoring at CTM36630). Section 785A applies to any assignment of the rights to receive plant & machinery rentals and treats the whole amount of the consideration as income to the extent it is not already so treated. But unlike the structured finance rules, section 785A does not require the advance to be treated as a financial liability. Accordingly, if the assignment consideration for the plant and machinery rentals is accounted for as a loan, section 774A etc will apply; if it is not, section 785A will apply.