Finance Leasing Manual - FLM36.24

Catching-up charge: deemed periods of account: cumulative excesses

The catching up charge under Paragraph 13 Schedule 12 FA 1997 is in addition to any actual charge under Paragraph 5 (see FLM32.01) for the period from the time the lease first comes within Part I to the (actual) end of the period of account in question. To avoid complications concerned with the set-off of cumulative excesses not only is a period of account deemed to end immediately before the time the lease first comes within Part I but also immediately afterwards. The effect is to segregate the catching up charge in its own brief period of account.

These deemed periods of account only exist for the purposes of Schedule 12 and not for any wider purposes. Thus in a case where the lease first comes within Part I in the middle of an actual period of account the rental income recognised under Paragraph 13 is added to any current rental income recognised under Paragraph 5 and the total brought into account in the computation for the accounting period (or year of assessment in an income tax case) corresponding to the actual period of account.