»Ê¹ÚÌåÓýapp

In a typical tax-driven transaction, a business grants a head lease to a bank (or other lender) for a premium. »Ê¹ÚÌåÓýapp bank then grants a typical finance lease to the business.

Commercially, this is equivalent to the bank making a loan to the business and the business repaying it at interest.

However, the lease premium is generally regarded as a capital receipt that is effectively not taxed on the recipient but the rentals under the leaseback were claimed to be allowable for tax purposes. »Ê¹ÚÌåÓýapp commercial effect is that the business (the head lessor and sub-lessee) obtains a loan and get tax relief for repaying it.

»Ê¹ÚÌåÓýappse arrangements were stopped by FA 2004. CAA01/S228B (as amended by FA 2008) denies relief for the capital element of the leaseback rentals. For further guidance, see CA28910.

In a variant on these arrangements, the bank sold the lease receivables at market value to a third party. This meant that the bank did not account for the lease as a finance lease. Such arrangements are caught by the provisions of CTA10/S752 onwards.