Overview Part 1: New Part 11A of ITA 2007 Section 614BX: Pre-26 November 1996 schemes where this Chapter does not at first apply
891.This section makes provision for recognising income from some finance leases which form part of a “pre‑26 November 1996 scheme” as defined in section 614D(1)(a). It is based on paragraph 13 of Schedule 12 to FA 1997.
892.A lease which forms part of a pre‑26 November 1996 scheme only falls within Part 11A if it meets all the conditions in section 614BC. It does not fall within Chapter 3 as that Chapter only applies to leases which do not form part of a pre‑26 November 1996 scheme (see section 614CB(1)(b) and the definition of a post‑25 November 1996 scheme in section 614D(1)(b)).
893.If a lease forming part of a pre‑26 November 1996 scheme met all the conditions in section 614BC on 26 November 1996, it falls within Chapter 2 for all periods of account beginning, or treated under section 614DB as beginning, on or after that date, subject to section 614BB(3).
894.But such a lease may not meet all those conditions until after 26 November 1996. In that case, this section effects a catching up exercise by taxing under section 614BF in the period when the lease is first subject to the rules in Chapter 2 the accumulated excess (if any) of the accountancy measure of income from the lease over the income actually taxed in earlier periods. No such excess relating to periods prior to 26 November 1996 can be taxed in this way nor are the assessments for earlier periods of account actually re‑opened. The catching up is done in the period in which the conditions are met.
895.Subsection (3)(b) provides that for the purposes of Part 11A the time when the conditions are satisfied forms its own brief period of account. This ensures that the computational provisions in this section work correctly.
896.Subsection (10) provides for the case where for example there has been an assignment within section 614BQ and the lessor at an earlier time was within the charge to corporation tax.