Introduction Disposal values: termination etc of long funding leases
10.Paragraph 6 amends section 66 of CAA by inserting a reference to section 70E of CAA. This puts beyond doubt that the definition of disposal receipt at section 60 of CAA includes a disposal under section 70E.
11.Paragraph 7 amends the definition at section 70E of CAA of the disposal value when a long funding lease comes to an end. It also provides that a disposal value is brought into account when the leased asset ceases to be used wholly for a qualifying activity.
12.Sub-paragraph (2) replaces the phrase “the lease terminates” at section 70E(1)(c) with the phrase “a relevant event occurs”.
13.Sub-paragraph (3) inserts new subsection (1A) into section 70E of CAA which defines a relevant event. A relevant event occurs where the lease terminates or the plant or machinery begins to be used wholly or partly for purposes other than that of the qualifying activity or the lessee’s qualifying activity permanently ceases.
14.Sub-paragraph (4) substitutes the phrase “relevant event” for the phrase “termination of the lease” at section 70E(2)(a). This means that a relevant event is a disposal event, with the effect that the disposal value to be brought in by a lessee under a long funding lease is given by section 70E rather than by the general rules at section 61 of CAA.
15.Sub-paragraph (5) replaces subsections (3) to (8) of section 70E of CAA with new subsections (2A) to (2H).
16.Paragraph 8 provides the commencement rule for relevant events within the meaning of section 70E(1A) of CAA.