Finance Leasing Manual - FLM13.39
Sale and leaseback: deductibility of rents under lease-back: 'income-into-capital' schemes
Particular issues regarding the deduction of rentals arise where
the sale and lease-back transaction is such that the lessor's tax
treatment is subject to Part I Schedule 12 FA 1997, that is one
where the arrangements enable the lessor to take part of the return
on its investment in capital form ('income-into-capital' schemes).
An example of a typical 'income-into-capital' scheme is at
FLM13.42.
Points to consider on the deduction of the lessee's rentals
are:
- whether or not it is appropriate to recognise rental payments on the basis that this is a finance lease, rather than an operating lease - see FLM13.43
- what the payments are for - see FLM13.44 onwards.
