Chapter CA23840
| Published date | 16 April 2016 |
| Record Number | CA23840 |
| Court | HM Revenue & Customs |
| Issuer | HM Revenue & Customs |
The lessor of assets may transfer them to another person who becomes the lessor of the assets. The lease may be transferred along with the assets or a new lease of the assets may be granted. When this happens there is continuity.
Treat the old lessor as if the lease terminated immediately before the transfer.
Treat the new lessor as if:
- a new lease had been entered into immediately after the transfer,
- the new lease started on the transfer date, and
- the term of the new lease started on the transfer date.
Where:
- the term of the new lease is the unexpired portion of the term of the old lease and
- the rents receivable under the new lease are the same as the rents that would have been receivable under the old lease,
treat the new lease as a lease of the same type as the old lease.
Type means long funding or not. So if the old lease was a long funding lease for the old lessor you should treat the new lease as a long funding lease for the new lessor even though it does not satisfy the conditions for being a long funding lease. If the old lease was not within the long funding lease legislation the new lease is not in it either.
Example Jackson leases an asset to Warrender on a 20 year long funding lease. After 17 years when the lease still has three years to run he transfers the asset and the lease to Lowe so Lowe becomes the lessor. Since the lease was transferred to Lowe along with the asset, the term of Lowe’s lease to Warrender will be the unexpired portion of Jackson’s lease to Warrender and the rents will be the same. Treat Lowe as if he had entered into a new long funding lease immediately after the transfer even though Lowe’s lease is only three years long, as if that lease had started on the transfer date and as if the term of the new lease started on the transfer date.
Treat the following as a transfer of an asset:
- a disposal of the asset or of the lessor’s interest in the asset,
- any arrangements under which the lessor’s interest in the asset is terminated and another person becomes the lessor,
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where a person has been treated as the owner of a fixture by CAA01/S176 CA26150 a cessation of that deemed ownership because:
- the person ceases to have the qualifying interest,
- a lessee is treated as the owner of the fixture,
- the fixture is permanently severed from the relevant land,
- the person is an equipment lessor and assigns their rights under the equipment lease or the...
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