§ Hire-purchase agreements
§ 8.—(1) If the lease constitutes a hire-purchase agreement, for the references in the provisos to subsections (1) and (2) of the principal section to the amount of the capital sum there shall, where that capital sum was obtained in respect of the lessee's interest in the lease constituting the hire-purchase agreement, be substituted references to the amount of the capital sum after deducting any capital expenditure which was incurred by the person obtaining the capital sum in providing the lessee's interest and which is, for capital allowance purposes, still unallowed at the time when the assignment or other transaction takes place in respect of which the capital sum is obtained.
§ (2) In this paragraph "capital expenditure incurred by the person obtaining the capital sum in providing the lessee's interest" means—
- (a) so much of any payment made under the lease by the person obtaining the capital sum (or, where the capital sum was obtained by the personal representatives of a deceased person, so made by that deceased person) as is not a payment in respect of which a deduction is allowable by way of income tax relief which is one of the kinds listed in subsection (4) of the principal section, plus
- (b) where the lessee's interest was assigned to the person obtaining the capital sum, any capital payment made by that person as consideration for the assignment.
§ (3) In this paragraph the reference to the amount of capital expenditure which is, for capital allowance purposes, still unallowed at the said time shall be construed as a reference to the amount of the capital expenditure after deducting any amount which, under section 297 of the Income Tax Act 1952 (definition of "expenditure unallowed" for purposes of capital allowances for machinery and plant), would be deductible in ascertaining as at that time the amount still unallowed of expenditure incurred by the said person in providing the leased asset.
§ (4) If the amount to be deducted in pursuance of subparagraph (1) of this paragraph exceeds the amount of the capital sum from which it is to be deducted, no charge shall arise under subsection (1) or subsection (2) of the principal section in respect of the capital sum.1360
§ Disposition of part of rights under hire-purchase agreement
§ 9.—(1) If the capital sum represents the consideration for part only of the lessee's interest in the lease which constitutes a hire-purchase agreement, the amount to be deducted under paragraph 8(1) of this Schedule shall be such proportion of the capital expenditure which is still unallowed as is reasonable having regard to the degree to which the capital expenditure has contributed to the value of what is disposed of in return for the capital sum.
§ (2) If more than one capital sum is, or is to be regarded as, obtained by the same person in respect of the lessee's interest in the lease which constitutes a hire-purchase agreement, then, so far as in respect of one of those capital sums any deduction is made in respect of capital expenditure in pursuance of paragraph 8(1) of this Schedule, that capital expenditure shall be left out of account in applying paragraph 8 of this Schedule to any other such capital sum; and the order in which this sub-paragraph is applied shall be the order in which the capital sums are obtained.
§ Meaning of "hire-purchase agreement"
(2) In Scotland, for the foregoing definition there shall be substituted the following definition—
hire-purchase agreement" means any contract, in whatsoever terms it may be expressed, whereby goods are taken on hire by one person from another person in consideration of periodical payments to be made by the first mentioned person to the other person, with an option to the first mentioned person to become the buyer of the goods.—[The Solicitor-General.]
§ Schedule, as amended, agreed to.