OT21209 - Corporation Tax Ring Fence and Supplementary Charge

Supplementary Charge: Meaning of “Finance Lease” and “accounts”: ICTA88/s501A(8)-(10)

“Finance lease” is defined in ICTA88/s501A(8) and (9) by focusing on the way in which the arrangement is, or would be treated in the accounts of the lessee on the assumption that those accounts are prepared in accordance with UK GAAP.

Where companies are not required to draw their accounts up in accordance with UK GAAP, the matter is to be resolved by considering how the lease would be treated in hypothetical accounts drawn up under UK GAAP. The definition is widely drawn to cover, where appropriate, the treatment in the accounts of a person connected with the lessee or where the arrangements are part of a larger arrangement.

“Accounts” are defined in ICTA88/s501A(10) to include consolidated accounts drawn up under the appropriate UK legislation and the hypothetical accounts provided for in sub-sections (6) and (8).