Search Legislation

Corporation Tax Act 2010

Chapter 1: Introduction
Overview

2654.This Chapter not only gives an overview of the Part but also brings to prominence the definitions of certain terms fundamental to its provisions.

Section 895: Overview of Part

2655.This section describes the Part and the contents of each Chapter. It is new.

Section 896: Normal rent

2656.This section defines “normal rent”. It is based on paragraph 20 of Schedule 12 to FA 1997.

2657.Normal rent is the amount which but for this Part a lessor would bring into account as rent from a lease for the purposes of corporation tax.

Section 897: Accountancy rental earnings

2658.This section defines “accountancy rental earnings”. It is based on paragraph 21 of Schedule 12 to FA 1997.

2659.This Part provides that the accountancy rental earnings of a lessor in relation to a lease are, in certain circumstances, to be brought into account for corporation tax purposes instead of the normal rent from the lease.

2660.Subsections (1) and (2) provide that in relation to a lease “accountancy rental earnings” are the highest of the following three figures for a period of account:

  • the rental earnings (see section 898) of the lessor in relation to the lease;

  • the rental earnings of a connected person of the lessor in relation to the lease; or

  • the rental earnings in relation to the lease for the purposes of consolidated accounts of the group of which the lessor is a member.

2661.The purpose of taking the highest of the three figures is to ensure that the earnings fully reflecting the economic substance of the transaction are taxed. This is especially important when the capital sum which is an essential part of a leasing arrangement within Chapter 2 may be received not by the lessor but by a related party. In such a case it is only by considering the lessor’s position and that of the related party together that the true economic substance of the transaction can be appreciated. That is likely to be in the consolidated accounts of the group as a whole, or possibly in the accounts of the related party, rather than in those of the lessor company itself.

Section 898: Rental earnings

2662.This section defines “rental earnings”. It is based on paragraph 22 of Schedule 12 to FA 1997.

Back to top

Options/Help

Print Options

Close

Explanatory Notes

Text created by the government department responsible for the subject matter of the Act to explain what the Act sets out to achieve and to make the Act accessible to readers who are not legally qualified. Explanatory Notes were introduced in 1999 and accompany all Public Acts except Appropriation, Consolidated Fund, Finance and Consolidation Acts.

Close

More Resources

Access essential accompanying documents and information for this legislation item from this tab. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enacted version that was used for the print copy
  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • correction slips
  • links to related legislation and further information resources