BLM74010 | ’Income-into-capital’ schemes and back loaded leases: Bad debts: trading income - example

The point at BLM74005 can best be illustrated by an example. Assume the following position for the first two accounting periods relating to a continuing finance lease to which Part 21 of CTA 2010 applies.

In the absence of provisions in Part 21 restricting the cumulative accountancy rental excess, the excess available to carry forward at the end of year 2 would be 1000 even though, net of bad debt relief, no rents have been taxed.