Introduction Transfer followed by hire purchase etc: restrictions on hirer’s allowances
28.Paragraph 18 amends subsection 51A(10) of CAA by inserting a reference to new section 229A(2). This makes it clear that no annual investment allowance is available to the lessee under a hire purchase etc and long funding leaseback arrangement.
29.Paragraph 19 amends subsection 52(5) of CAA by inserting a reference to new section 229A. This makes it clear that no first year allowance is available to the lessee under a hire purchase etc and long funding leaseback arrangement.
30.Paragraph 20 amends subsection 57(3) of CAA to ensure that a person’s available qualifying expenditure does not include an amount excluded by new section 229A.
31.Paragraph 21 inserts new section 229A after section 229. This section has the same effect as sections 217 and 218 of CAA which deny first year allowances and limit the qualifying expenditure in an arrangement where an existing business asset is sold and leased back to the same person or someone connected to them. That legislation only dealt with a claim by new owners of the plant or machinery who leased it back to the original seller or someone connected to them. New section 229A covers cases where capital allowance entitlement arises to a person under a contract that means that they shall or may become the owner of the plant or machinery where this contract follows a transfer by the person of the same plant or machinery.
32.Paragraph 22 provides that the amendments made by paragraphs 18 to 21 apply to leasebacks where the lease commenced on or after 13 November 2008.