Finance Leasing Manual - FLM31.92

Leases ceasing to be within Part I: connected persons

Paragraph 25 Schedule 12 FA 1997 provides that a person is connected with another person if he is connected within the meaning of Section 839 ICTA 1988 (see CG 2400 for details). Paragraph 25(1) provides that 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.
These provisions are widely drafted in order to prevent the interposition of 'stooges' in a chain of assignments to get round the rule that the status of a lease is not re-tested on a transfer to a connected person.