Commentary

B5.413 Leases—disallowance of inflated rentals on hire of assets: sale and leaseback transactions

Business tax
Business tax | Commentary

B5.413 Leases—disallowance of inflated rentals on hire of assets: sale and leaseback transactions

Business tax | Commentary

B5.413 Leases—disallowance of inflated rentals on hire of assets: sale and leaseback transactions

The charge under CTA 2010, s 874 and ITA 2007, s 681DD (see B5.411) does not apply to payments by a person (X) under a lease of an asset which are allowable deductions in computing the profits or losses of a trade and at any time before the creation of the lease1:

  1.  

    (a)     it was used for the purposes of the trade in question (or of another trade carried on by X), and

  2.  

    (b)     when so used it was owned by X

References to a trade include a profession or vocation2.

Instead, the allowable deduction for the period for which the payment was made is restricted to the amount of a commercial rent of the asset for that period3.

This

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