OpenLegislation

Section 148DB “Starting value” where plant or machinery originally unqualifyingF1F2

(1)

This section applies if the conditions in subsection (2) are met in relation to a long funding operating lease to which section 148D applies.

(2)

The conditions are that—

(a)

the lessor owns the plant or machinery as a result of having incurred expenditure on its provision for purposes other than those of a qualifying activity,

(b)

the plant or machinery is brought into use by the lessor for the purposes of a qualifying activity on or after 1 April 2006, and

(c)

that qualifying activity is the leasing of the plant or machinery under the lease.

(3)

For the purposes of section 148D the starting value is the lower of—

(a)

first use market value, and

(b)

first use amortised market value.

(4)

“First use market value” means the market value of the plant or machinery at the time when it is first brought into use for the purposes of the qualifying activity.

(5)

“First use amortised value” means the value that the plant or machinery would have at the time when it is first brought into use for the purposes of the qualifying activity on the assumptions in subsection (6).

(6)

The assumptions are that—

(a)

the cost of acquiring the plant or machinery had been written off on a straight line basis over its remaining useful economic life, and

(b)

any further capital expenditure incurred had been written off on a straight line basis over so much of its remaining economic life as remains at the time when the expenditure is incurred.

(7)

For the meaning of “qualifying activity”, “remaining useful economic life” and writing off on a straight line basis, see section 148J(2), section 148J(4) (and section 70YI of CAA 2001 as applied by that section) and section 148J(3) respectively.

Annotations

Textual amendments

F1

Pt. 2 Ch. 10A, (ss 148A-148J) inserted (19.7.2006) by Finance Act 2006 (c. 25), s. 81, Sch. 8 para. 13

F2

Ss. 148DA, 148DB inserted (1.4.2010) (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 448 (with Sch. 2)

Notes on Lessors under long funding operating leases

Textual amendments

F2

Pt. 2 Ch. 10A, (ss. 148A-148J) inserted (19.7.2006) by Finance Act 2006 (c. 25), s. 81, Sch. 8 para. 13