Commentary on Sections Glossary Structure of Part 2 Overview
439.This Chapter reduces or prohibits allowances on qualifying expenditure if:
	the plant or machinery is leased during the designated period to a person who is not resident in the UK;
	that person does not use the plant or machinery exclusively for earning profits chargeable to UK tax; and
	the leasing is not protected leasing.
440.This expenditure is referred to in this commentary as “affected qualifying expenditure”.
441.Sections 105 and 106 define “leasing”, “overseas leasing”, “protected leasing” and “designated period”.
442.Section 107 allocates affected qualifying expenditure to a class pool (the overseas leasing pool) unless it is long-life asset expenditure or expenditure which must be put into a single asset pool.
443.Section 108 modifies the general rules for disposal values if plant or machinery in the overseas leasing pool is disposed of to a connected person. In those circumstances the section also affects the expenditure that the person acquiring the plant or machinery is treated as incurring.
444.Section 109 provides writing-down allowances at 10% a year (instead of 25%) for pools containing affected qualifying expenditure (other than long-life asset expenditure). So this rate applies both to the overseas leasing pool and to any single asset pools containing such expenditure.
445.Section 110 prohibits allowances on affected qualifying expenditure if the plant or machinery is leased under certain types of lease.
446.Sections 111 to 113 recover any excess allowances from earlier chargeable periods if it only becomes clear in a later chargeable period that the expenditure is affected qualifying expenditure. The amount recovered broadly leaves taxpayers where they would have been if allowances had always been given at 10% on the affected qualifying expenditure. There are special provisions to do this for ships.
447.Sections 114 to 115 recover any excess allowances made for earlier chargeable periods if, in a later chargeable period, circumstances are such that allowances are prohibited. The amount recovered again broadly puts taxpayers back where they would have been if allowances had been prohibited from the start.
448.Sections 116 and 117 provide for certain modifications to these rules if the plant or machinery is let to joint lessees.
449.Sections 118 to 120 deal with certificates and notices that are required in certain cases. Sections 121 to 126 define some terms used in this Chapter.