Finance Leasing Manual - FLM31.42

Second condition: connected persons

A sum does not cease to be a 'major lump sum' for the purposes of paragraph 3(2) Schedule 12 FA 1997 just because it is paid to a connected person rather than the lessor. Were that the case it would be relatively straightforward matter to side-step the rules.

Paragraph 28(2) Schedule 12 applies the general definition of a connected person in Section 839 ICTA 1988 (see CG 2400 onwards). Paragraph 28(1) ensures that a person is to be regarded as connected with another person during a period of account even if there is no connection at that time. Thus, if a person is connected with another person at some time in the period which:

• begins as soon as the leasing arrangements are made; and

• ends when the lessor in question finally ceases to have any interest in the asset or related arrangements,

they are to be regarded as connected throughout that period.