Section 377A — Corporation Tax Act 2010: Lessee under long funding finance leases: right-of-use leases

Lessee under long funding finance leases: right-of-use leases 377A 1 This section applies if—

a for the whole or part of any period of account, a company is the lessee of any plant or machinery under a right-of-use lease that is a long funding finance lease, b there is a change in the amounts payable under the lease, and c as a result of the change and in accordance with generally accepted accounting practice—

i a remeasurement of the lease liability is shown in the person’s accounts for the period of account, or ii a deduction is shown in those accounts other than as an interest expense under the lease or an amount of depreciation, or an impairment, in respect of the right-of-use asset arising from the lease.

2 In calculating the company’s profits for the period of account, the amount deducted in respect of amounts payable under the lease (after taking account of any limitation as a result of section 377) is to be increased or decreased so as to take account of the remeasurement or deduction mentioned in subsection (1)(c) .

3 No adjustment is to be made under subsection (2) if the remeasurement or deduction results in the company being treated by section 70D of CAA 2001 (long funding finance lease: additional expenditure: allowances for lessee) as having incurred further capital expenditure on the provision of the plant or machinery.