Section 381 — Corporation Tax Act 2010: Interpretation of Chapter

Interpretation of Chapter 381 1 Chapter 6A of Part 2 of CAA 2001 (interpretation of provisions about long funding leases) applies in relation to this Chapter as it applies in relation to that Part.

2 Accordingly— “ the finance lease test ” means the finance lease test in section 70N of CAA 2001, “ long funding lease ” has the meaning given by section 70G of that Act, “long funding finance lease” means—

in relation to any person, a long funding lease that meets the finance lease test as a result of section 70N(1)(a) of that Act, or in relation to a lessee, a right-of-use lease (see section 70YI(1) of that Act) which is a long funding lease— that meets the lease payments test in section 70O of that Act or the useful economic life test in section 70P of that Act, but is not a lease that, before a relevant change of classification (see section 70YA(11) of that Act), was a long funding operating lease; “ long funding operating lease ” means a long funding lease that is not a long funding finance lease.

3 As to the meaning of the following other expressions used in this Chapter and defined in Chapter 6A of Part 2 of CAA 2001, see—

a for “ commencement ”, in relation to the term of a lease, section 70YI(1) of that Act, b for “inception”, section 70YI(1) of that Act, c for “lease”, section 70YI(1) of that Act, d for “lessee”, section 70YI(1) of that Act, e for “lessor”, section 70YI(1) of that Act, f for “ market value ”, in relation to plant or machinery, section 70YI(2) of that Act, g for “ plant or machinery ”, in relation to a lease, section 70YI(3) of that Act, h for “plant or machinery lease”, section 70YI(1) of that Act, i for “remaining useful economic life”, section 70YI(1) of that Act, j for “ the term ”, in relation to a lease, section 70YI(1) of that Act, k for “termination”, section 70YI(1) of that Act, l for “termination amount”, section 70YG of that Act, and m for “termination value”, section 70YH of that Act.

4 In this Chapter— “ qualifying activity ” has the same meaning as in Part 2 of CAA 2001, and “ residual value ”, in relation to any plant or machinery leased under a long funding operating lease, means— the estimated market value of the plant or machinery on a disposal at the end of the term of the lease, less the estimated costs of that disposal.

5 Any reference in this Chapter to a sum being written off on a straight line basis over a period of time (the “writing-off period”) is a reference to—

a the sum being apportioned between each of the periods of account in which any part of the writing-off period falls, b that apportionment being made on a time basis, according to the proportion of the writing-off period that falls in each of the periods of account, and c the sum being written off accordingly.