Corporation Tax Bill

House of Commons

Session 2008 - 09
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Other Bills before Parliament

Corporation Tax Bill

Corporation Tax Bill
Part 4 — Property income
Chapter 6 — Commercial letting of furnished holiday accommodation
120

Definition
265
Meaning of “commercial letting of furnished holiday accommodation”
(1)
A letting is a lease or other arrangement under which a person is entitled to the
use of accommodation.
(2)
A letting of accommodation is commercial if the accommodation is let—
5
(a)
on a commercial basis, and
(b)
with a view to the realisation of profits.
(3)
A letting is of furnished holiday accommodation if—
(a)
the person entitled to the use of the accommodation is also entitled, in
connection with that use, to the use of furniture, and
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(b)
the accommodation is qualifying holiday accommodation (see sections
267 and 268).
(4)
This section applies for the purposes of this Chapter.
266
Meaning of “relevant period” in sections 267 and 268
(1)
For the purposes of sections 267 and 268 “the relevant period” for
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accommodation let by a company in an accounting period is determined as
follows.
(2)
If the accommodation was not let by the company as furnished
accommodation in the 12 months immediately before the accounting period,
“the relevant period” is 12 months beginning with the first day in the
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accounting period on which it is let by the company as furnished
accommodation.
(3)
If the accommodation—
(a)
was let by the company as furnished accommodation in the 12 months
immediately before the accounting period, but
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(b)
is not let by the company as furnished accommodation in the 12 months
immediately after the accounting period,

“the relevant period” is 12 months ending with the last day in the accounting
period on which it is let by the company as furnished accommodation.
(4)
Otherwise “the relevant period” is the period of 12 months ending with the last
30
day of the accounting period.
267
Meaning of “qualifying holiday accommodation”
(1)
Accommodation which is let by a company during an accounting period is
“qualifying holiday accommodation” for the accounting period if the
availability, letting and pattern of occupation conditions are met.
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(2)
The availability condition is that, during the relevant period, the
accommodation is available for commercial letting as holiday accommodation
to the public generally for at least 140 days.
(3)
The letting condition is that, during the relevant period, the accommodation is
commercially let as holiday accommodation to members of the public for at
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least 70 days.

Corporation Tax Bill
Part 4 — Property income
Chapter 6 — Commercial letting of furnished holiday accommodation
121

(4)
For the purposes of the letting condition, a letting of accommodation for a
period of longer-term occupation (see subsection (6)) is not a letting of it as
holiday accommodation.
(5)
The pattern of occupation condition is that, during the relevant period, not
more than 155 days fall during periods of longer-term occupation.
5
(6)
For the purposes of this section a “period of longer-term occupation” is a
continuous period of more than 31 days during which the accommodation is
in the same occupation otherwise than because of circumstances that are not
normal.
268
Under-used holiday accommodation: averaging elections
10
(1)
This section applies if during an accounting period a company lets both—
(a)
qualifying holiday accommodation, and
(b)
accommodation that would be qualifying holiday accommodation if
the letting condition (see section 267(3)) were met in relation to it
(“under-used accommodation”).
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(2)
The company may make an election for the accounting period specifying—
(a)
the qualifying holiday accommodation, and
(b)
any or all of the under-used accommodation.
(3)
The under-used accommodation so specified is treated as qualifying holiday
accommodation for the accounting period if the average of the number of let
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days for the accounting period of all the accommodation specified in the
election is at least 70.
(4)
“The number of let days” for an accounting period of any accommodation is
the number of days during the relevant period for which it is commercially let
by the company as holiday accommodation to members of the public.
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(5)
Qualifying holiday accommodation may not be specified in more than one
election for an accounting period.
(6)
An election for an accounting period must be made within the period of two
years beginning at the end of the accounting period.
Separate profit calculations
30
269
Capital allowances and loss relief
(1)
If a UK property business consists of both—
(a)
the commercial letting of furnished holiday accommodation (“the
furnished holiday lettings part”), and
(b)
other businesses or transactions (“the other part”),
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this section requires separate calculations to be made of the profits of the
furnished holiday lettings part and the other part.
(2)
The calculations must be made if—
(a)
section 248 or 249 of CAA 2001 (giving effect to allowances and
charges) applies to the furnished holiday lettings part or the other part,
40
or

Corporation Tax Bill
Part 4 — Property income
Chapter 7 — Rent receivable in connection with a UK section 39(4) concern
122

(b)
any provision of Chapter 2 of Part 10 of ICTA (loss relief) applies in
relation to a loss made in either of those parts.
(3)
If there is a letting of accommodation only part of which is holiday
accommodation, such apportionments are to be made for the purposes of this
section as are just and reasonable.
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Chapter 7
Rent receivable in connection with a UK section 39(4) concern
Charge to tax on rent receivable in connection with a UK section 39(4) concern
270
Charge to tax on rent receivable in connection with a UK section 39(4) concern
The charge to corporation tax on income applies to rent receivable in
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connection with a UK section 39(4) concern.
271
Meaning of “rent receivable in connection with a UK section 39(4) concern”
(1)
For the purposes of this Chapter rent is receivable in connection with a UK
section 39(4) concern if—
(a)
it is receivable in respect of an estate, interest or right in or over land in
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the United Kingdom, and
(b)
the estate, interest or right is used, occupied or enjoyed in connection
with a concern listed in section 39(4).
(2)
For the purposes of this Chapter rent is also receivable in connection with a UK
section 39(4) concern if—
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(a)
it is receivable in respect of an estate, interest or right in or over land in
the United Kingdom,
(b)
the lease or other agreement under which it is receivable provides for
its recoupment by reducing royalties or payments of a similar nature,
and
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(c)
the reduction applies if the estate, interest or right is used, occupied or
enjoyed in connection with a concern listed in section 39(4).
(3)
In this Chapter “rent” includes—
(a)
a receipt mentioned in section 207(3), and
(b)
any other receipt in the nature of rent.
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Management expenses of owner of mineral rights
272
Deduction for management expenses of owner of mineral rights
(1)
This section applies if in an accounting period—
(a)
a company lets a right to work minerals in the United Kingdom, and
(b)
the company pays a sum wholly and exclusively as an expense of
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management or supervision of the minerals in the accounting period.
(2)
In calculating the amount of rent receivable in connection with a UK section
39(4) concern, a deduction is allowed for the sum for the accounting period.

Corporation Tax Bill
Part 4 — Property income
Chapter 7 — Rent receivable in connection with a UK section 39(4) concern
123

(3)
This is subject to section 273 (relief in respect of mineral royalties).
Mineral royalties
273
Relief in respect of mineral royalties
(1)
This section applies if in an accounting period—
(a)
a UK resident company is entitled to receive mineral royalties under a
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mineral lease or agreement, and
(b)
the royalties are chargeable to tax under this Chapter.
(2)
In calculating the amount of the royalties so chargeable, the company is treated
as—
(a)
entitled to receive only half of the total of the royalties arising under the
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lease or agreement in the accounting period, and
(b)
paying in the accounting period only half of the total of the expenses
mentioned in section 272(1)(b) (deduction for management expenses of
owner of mineral rights).
(3)
As to the meaning of “mineral lease or agreement” and “mineral royalties”, see
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sections 274 to 276.
(4)
See also section 201 of TCGA 1992 (gains treated as accruing to a company
entitled to receive mineral royalties).
274
Meaning of “mineral lease or agreement” and “mineral royalties”
(1)
In this Chapter “mineral lease or agreement” means—
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(a)
a lease, profit à prendre, licence or other agreement conferring a right
to win and work minerals in the United Kingdom,
(b)
a contract for the sale, or a conveyance, of minerals in or under land in
the United Kingdom, and
(c)
a grant of a right under section 1 of the Mines (Working Facilities and
25
Support) Act 1966 (c. 4) other than an ancillary right (within the
meaning of that Act).
(2)
In this Chapter “mineral royalties” means so much of any rent receivable under
a mineral lease or agreement as relates to the winning and working of minerals.
(3)
For the purposes of this section and section 276 “minerals” means all minerals
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and substances in or under land which are ordinarily worked for removal—
(a)
by underground working, or
(b)
by surface working,

but excluding water, peat, top-soil and vegetation.
275
Extended meaning of “mineral royalties” etc in Northern Ireland
35
(1)
In the application of this Chapter to Northern Ireland references to mineral
royalties include the following periodical payments.
(2)
The payments are—
(a)
payments of compensation under section 29 or 35 of the Mineral
Development Act (Northern Ireland) 1969 (c. 35 (N.I.)) (“the 1969 Act”),
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Corporation Tax Bill
Part 4 — Property income
Chapter 8 — Rent receivable for UK electric-line wayleaves
124

(b)
payments of compensation under section 4 of the Petroleum
(Production) Act (Northern Ireland) 1964 (c. 28 (N.I.)) (“the 1964 Act”),
(c)
payments made as mentioned in section 37 of the 1969 Act,
(d)
payments made under section 55(4)(b) of the 1969 Act, and
(e)
payments made under section 11 of the 1964 Act (payments in respect
5
of minerals to persons entitled to a share of royalties under section 13(3)
of the Irish Land Act 1903 (c. 37)).
(3)
In the application of this Chapter to Northern Ireland references to the mineral
lease or agreement under which mineral royalties are receivable include the
enactment under which those payments are made.
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276
Power to determine what counts as “mineral royalties”
The Commissioners for Her Majesty’s Revenue and Customs may by
regulations—
(a)
provide whether, and to what extent, rents receivable under a mineral
lease or agreement which relate both to the winning and working of
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minerals and to other matters are treated as mineral royalties, and
(b)
provide for treating the whole of such rents as mineral royalties if the
extent to which they relate to matters other than the winning and
working of minerals is small.
Chapter 8
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Rent receivable for UK electric-line wayleaves
Charge to tax on rent receivable for UK electric-line wayleaves
277
Charge to tax on rent receivable for a UK electric-line wayleave
The charge to corporation tax on income applies to rent receivable for a UK
electric-line wayleave.
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278
Meaning of “rent receivable for a UK electric-line wayleave”
(1)
For the purposes of this Chapter rent is receivable for a UK electric-line
wayleave if—
(a)
it is receivable in respect of an easement, servitude or right in or over
land in the United Kingdom, and
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(b)
the easement, servitude or right is enjoyed in connection with an
electric, telegraph or telephone wire or cable.
(2)
The reference to the enjoyment of an easement, servitude or right in connection
with an electric, telegraph or telephone wire or cable includes (in particular) its
enjoyment in connection with—
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(a)
a pole or pylon supporting such a wire or cable, or
(b)
apparatus used in connection with such a wire or cable.
(3)
In this Chapter “rent” includes—
(a)
a receipt mentioned in section 207(3), and
(b)
any other receipt in the nature of rent.
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