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Chapter BLM22015

Document Cited in Related
Vincent
Published date10 April 2016
Record NumberBLM22015
CourtHM Revenue & Customs
IssuerHM Revenue & Customs

An amendment to a lease may, as a matter of law, create a new lease.

Therefore you should review amendments to a lease to see if it has created a new lease, whether or not the documentation purports to show otherwise. The mere fact that the documents state a new lease has not been created is not proof that a new lease has not been created.

It is not entirely clear, in law, at what point changes to a lease create a new contract (and so a new lease) rather than amending an existing lease. You should accept that minor amendments, such as making small changes to the lease rentals as a result of incurring additional expenditure on the asset, will not create a new lease, see example below.

Where there are more substantial changes you will need to look at the facts before deciding whether the existing lease continues or whether a new lease has been created. You should, of course, also consider the consequences of the existence of a new lease. The most obvious are that

  • a lease that was not a long funding lease turns into a long funding lease (though this is most likely to happen where the lease term is extended)
  • a derived lease is created.

If the amendment creates a new lease as a matter of general law then you should consider whether the new lease is a long funding lease in the normal way. The normal commencement and transitional rules will apply to the new lease, see BLM23000 onwards. If you think that a new...

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