As mentioned in ¶1125-950, a finding that the lessor was engaged in the leasing activity otherwise than by way of trade would not, of itself, operate to deny the lessor capital allowances in respect of its expenditure, although it might operate to defer the lessor’s ability to claim those allowances and/or restrict the use which the lessor could effectively make of those allowances. A finding that the lessor was not trading would also mean that the income derived by the lessor from leasing the equipment would be chargeable as miscellaneous income rather than as income from a trade, that might, for example, affect the lessor’s use of carried-forward trading losses.

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