Section 425 — Corporation Tax Act 2010: Partner company's income and matching expense in different accounting periods

Partner company's income and matching expense in different accounting periods 425 1 This section applies if on any day (“ the relevant day ”)—

a a company carries on a business of leasing plant or machinery in partnership with other persons (see sections 410 to 414),

b the company is within the charge to corporation tax in respect of the business, and c there is a qualifying change of ownership in relation to the company.

2 On the relevant day—

a the company is treated as receiving an amount of income, and b the accounting period of the company ends.

3 The income—

a is treated as a receipt of the company's notional business (see section 417(6)),

and b is brought into account in calculating for corporation tax purposes the profits of that business for that accounting period.

4 On the day following the relevant day—

a the company is treated as incurring an expense, and b a new accounting period of the company begins.

5 The expense—

a is treated as an expense of the company's notional business, and b is allowed as a deduction in calculating for corporation tax purposes the profits of that business for that new accounting period.

6 This section is supplemented by sections 426 to 428.