Corporation Tax Act 2010 section 383

Income and matching expense in different accounting periods

Section 383 deals with the tax consequences when there is a qualifying change of ownership of a company that carries on a plant or machinery leasing business outside of a partnership.

• When a qualifying change of ownership occurs, the company's accounting period is forced to end on that day, and a deemed income receipt is recognised in that closing period.
• On the following day, a new accounting period begins and the company is treated as incurring a matching expense, which is deductible in that new period.
• The effect is to split the income and the corresponding expense across two separate accounting periods — one before the ownership change and one after.
• The detailed rules on the amount of the deemed income and expense, and related relief, are set out in sections 384 to 386, and the definition of a qualifying change of ownership is in sections 394A to 398A.