Commentary

D7.940 Calculation of profits—lease payments

Corporate tax
Corporate tax | Commentary

D7.940 Calculation of profits—lease payments

Corporate tax | Commentary

D7.940 Calculation of profits—lease payments

When calculating the contractors ring fence profits the total deduction that may be brought into account in respect of any lease payments for a relevant asset (D7.935) is limited to the hire cap1. Any amounts that are paid in excess of the hire cap are allowed as a deduction from the contractor's other total profits (ie non-ring fence or contractors ring fence profits) or may instead be surrendered for use against profits by other members of the paying company's group2. There is a targeted anti avoidance rule to prevent arrangements with a tax avoidance main purpose, from frustrating the intended application of these rules3.

The hire cap limitation is calculated by reference to the relevant percentage, which is applied to qualifying total costs4. If more than one lessor would be subject to the hire cap in respect of the same asset, the total hire cap calculation ensures that the restriction does not exceed that

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial