Section 387 — Corporation Tax Act 2010: “Business of leasing plant or machinery”

“Business of leasing plant or machinery” 387 1 This section determines for the purposes of this Chapter whether, on any day (“ the relevant day ”), a company (“ the relevant company ”) carries on a business of leasing plant or machinery.

2 A business carried on by the relevant company is a business of leasing plant or machinery on the relevant day if condition A or B is met.

3 Condition A is that at least half of the relevant plant or machinery value relates to plant or machinery falling within subsection (7) .

4 Subsection (3) is supplemented by section 388.

5 Condition B is that at least half of the relevant company's income in the past 12 months derives from plant or machinery falling within subsection (7).

6 Subsection (5) is supplemented by section 391.

7 Plant or machinery falls within this subsection if—

a it is or at any time in the past 12 months has been leased out by the relevant company or a qualifying associate, b the lease under which it is or has been leased out is a plant or machinery lease but not an excluded lease of background plant or machinery for a building (see section 437(3)),

and c if the plant or machinery satisfies paragraph (a) only because it is or has been leased out by a qualifying associate, the lessee under the lease is or was someone other than the relevant company.

8 For the purposes of subsection (7)—

a plant or machinery is “leased out” by a person if it is subject to a plant or machinery lease under which that person is a lessor, b “ associate ” means a person connected with the relevant company (see also subsection (9)),

and c a person is a “qualifying associate” if the person is an associate at the start of the relevant day or at any earlier time in the past 12 months (whether or not a time when the plant or machinery was leased out by the person).

9 If the relevant company is owned by a consortium or is a qualifying 75% subsidiary of a company owned by a consortium, the reference in subsection (8)(b) to a person connected with the relevant company also includes—

a any member of the consortium, and b any person connected with such a member.

10 A reference in this section to the past 12 months is to the period of 12 months ending with the relevant day.