Finance Leasing Manual - FLM35.04

Capital allowances: avoidance of balancing adjustments: 'major lump sum'

The provisions in Paragraph 11 Schedule 12 FA 1997 are triggered by the occurrence of an occasion on which a 'major lump sum', as defined in Paragraph 3(2), becomes payable.

In summary, a major lump sum is a sum, excluding any element which is rent, which under UK accounting standards (principally SSAP 21) is regarded as consisting partly of repayment of the lessor's investment in the leased asset and partly of return on that investment. It may be received not only by the lessor but also by a connected person of the lessor. See FLM31.38 for more details.