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CTA10\S288

CTA10\S288 applies where a company sells an asset on or after 9 March 1999 and leases it back under a finance lease. This allows a ring fence deduction for the amount of the lease rental payments that would, under generally accepted accounting principles, be treated as a finance charge only if the sale proceeds are used to meet qualifying North Sea expenditure (i.e. expenditure of the same sort as would qualify under CTA10\S286).

Thus the “interest� element of a finance lease is subject to similar restrictions to those that apply to loan interest. Any amounts that would be deductible apart from CTA10\S288 are treated as if they were non-trade debits, and can be allowed against non Ring Fence profits accordingly.