In this context it was important for individuals borrowing to invest in the leasing partnership to establish the existence of a trade as they could only claim a deduction for interest costs if the partnership carried on a trade with a view to profit
In the second recent case of its kind (see No trading loss relief for partners), HM Revenue & Customs has successfully argued in Eclipse Film Partners No 35 LLP that a film leasing partnership is not trading
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The question of whether an equipment lessor is trading is important because it allows the lessor to surrender any tax losses it makes (for example, as a result of claiming capital allowances, the tax relief available in the UK for depreciation, on its equipment) and to receive surrenders of losses from other companies in the lessor group to reduce the lessors taxable profits
Norton Roses Judy Harrison explains why its important for lessees and financiers to act in anticipation of the proposed changes to the lease accounting standard The International Accounting Standards Board and the Financial Accounting Standards Board have been consulting for a number of years to try and agree a revised international leasing standard
Norton Roses Judy Harrison comments on the impact of changes to the rules on capital allowances. The UK government is currently consulting on introducing changes to three areas of the rules on capital allowances A capital allowance is a special tax reduction given to companies in order to incentivise them to invest in fixed assets.
Matthew Hodkin and Judith Harrison of law firm Norton Rose explain the recent changes to tax on the sale of leasing companies, and outline why they have proved popular. In 2006, the UK Government introduced a series of tax changes to combat tax avoidance which resulted from the sale of leasing companies (so-called lease-tail sales)