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A sale and leaseback situation arises where land or an interest in land is sold on the basis that the purchaser must grant a lease back to the vendor, or a person connected with the vendor.

This guidance note deals with the following anti-avoidance rules which may impact on sale and leaseback arrangements:

1. •

   rules limiting the amount of corporation tax deduction available for rental payments following a sale and leaseback (CTA 2010, ss 834-886) and

2. •

   rules which treat a portion of the sale price as income rather than capital in certain specified circumstances (CTA 2009, s 225)

The equivalent anti-avoidance rules for income tax are in ITA 2007, ss 681A-681AN.

For HMRC guidance on this topic see BIM61301 onwards, and for the capital gains consequences see CG70774.

For other tax implications of sale and leaseback arrangements relevant to companies, please see the following:

1. •

   the Stamp duty land tax and leases guidance note, specifically the section dealing with SDLT leaseback relief

2. •

   the Capital allowances