|
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|
842 | Payments made for later periods |
| |
(1) | This section applies for the purposes of sections 839 to 841. |
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(2) | For the purposes of this section the relevant year (in relation to a payment) is |
| |
the year which begins with the date it is made. |
| |
(3) | If a payment is made for a period all of which is after the relevant year, it must |
| 5 |
be treated as made for the relevant year. |
| |
(4) | If a payment is made for a period part of which is after the relevant year, it must |
| |
be treated as if a corresponding part of it was made for the relevant year (and |
| |
no part for a later period). |
| |
| 10 |
843 | Exclusion of service charges etc |
| |
(1) | This section applies for the purposes of sections 838 and 839. |
| |
(2) | A payment must be excluded so far as it is in respect of any of the following— |
| |
| |
(b) | the use of relevant assets, and |
| 15 |
(c) | rates usually borne by the tenant. |
| |
(3) | The amount excluded must be just and reasonable. |
| |
(4) | If a lease or agreement contains provisions fixing the payments or parts of |
| |
payments which are in respect of services or the use of assets, those provisions |
| |
| 20 |
(5) | A relevant asset is any description of property or rights other than land or an |
| |
| |
844 | Commercial rent: comparison with rent under a lease |
| |
(1) | Subsection (3) applies— |
| |
(a) | for the purpose of making a comparison under rule 4 of section 838(3) |
| 25 |
if section 838 has effect because of section 835(1), and |
| |
(b) | for the purpose of making a comparison under section 839(3) if section |
| |
839 has effect because of section 835(2). |
| |
(2) | In this section “the actual lease” means the lease mentioned in section 835(1)(b) |
| |
| 30 |
(3) | The commercial rent is the rent which might be expected to be paid under a |
| |
lease, of the land in respect of which the payment mentioned in section |
| |
835(1)(b) or (2)(b) is made, which— |
| |
(a) | was negotiated in the open market when the actual lease was created, |
| |
(b) | is of the same duration as the actual lease, |
| 35 |
(c) | is subject to the terms and conditions of the actual lease as respects |
| |
liability for maintenance and repairs, and |
| |
(d) | provides for rent payable at uniform intervals and at an appropriate |
| |
| |
(4) | Rent is payable at an appropriate rate if— |
| 40 |
|
| |
|
| |
|
(a) | it is payable at a uniform rate, or |
| |
(b) | in a case where the rent payable under the actual lease is rent at a |
| |
progressive rate (and such that the amount of rent payable for a year is |
| |
never less than the amount payable for a previous year), it progresses |
| |
by gradations proportionate to those provided by the actual lease. |
| 5 |
845 | Commercial rent: comparison with payments other than rent |
| |
(1) | Subsection (2) applies— |
| |
(a) | for the purpose of making a comparison under rule 4 of section 838(3) |
| |
if section 838 has effect because of section 836(1), and |
| |
(b) | for the purpose of making a comparison under section 839(3) if section |
| 10 |
839 has effect because of section 836(2). |
| |
(2) | The commercial rent is the rent which might be expected to be paid under a |
| |
lease, of the land in respect of which the payment mentioned in section |
| |
836(1)(b) or (2)(b) is made, which— |
| |
(a) | was negotiated in the open market when the rentcharge or other |
| 15 |
transaction mentioned in section 836(1)(b) or (2)(b) was effected, |
| |
(b) | is a tenant’s repairing lease, and |
| |
(c) | is of an appropriate duration. |
| |
(3) | A tenant’s repairing lease is a lease where the lessee is under an obligation to |
| |
maintain and repair the whole (or substantially the whole) of the premises |
| 20 |
| |
(4) | To see whether a lease is of an appropriate duration, take the period over |
| |
which payments are to be made under the rentcharge or other transaction, |
| |
| |
(a) | if that period is 200 years or more (or the obligation to make the |
| 25 |
payments is perpetual) an appropriate duration is 200 years, or |
| |
(b) | if that period is less than 200 years, an appropriate duration is the same |
| |
| |
| |
(1) | This section applies for the purposes of this Chapter. |
| 30 |
(2) | A reference to a lease includes a reference to any of the following— |
| |
(a) | an underlease, sublease, tenancy or licence, and |
| |
(b) | an agreement for a lease, underlease, sublease, tenancy or licence, and |
| |
(c) | in the case of land outside the United Kingdom, an interest |
| |
corresponding to a lease (as defined here). |
| 35 |
(3) | A reference to rent includes a reference to any payment under a lease. |
| |
(4) | A reference to rent under a lease includes a reference to expenses which the |
| |
tenant under the lease is treated as incurring in respect of the land subject to |
| |
| |
(a) | sections 63 to 67 of CTA 2009 (land occupied for trade purposes), and |
| 40 |
(b) | sections 232 to 234 of that Act (taxed leases). |
| |
(5) | Expenses within subsection (4) must be treated as having been paid as soon as |
| |
| |
|
| |
|
| |
|
| |
(1) | This section applies for the purposes of this Chapter. |
| |
(2) | The following persons are associated with one another— |
| |
(a) | the transferor in an affected transaction and the transferor in another |
| |
affected transaction, if the two persons are acting in concert or if the two |
| 5 |
transactions are in any way reciprocal, and |
| |
(b) | any person who is an associate of either of those associated transferors. |
| |
(3) | Two or more bodies corporate are associated with one another if they |
| |
participate in, or are incorporated for the purposes of, a scheme— |
| |
(a) | for the reconstruction of any body or bodies corporate, or |
| 10 |
(b) | for the amalgamation of any two or more bodies corporate. |
| |
(4) | Persons are associated with one another if they are associates as defined in |
| |
section 882 (relatives, settlements, persons controlling bodies, joint owners |
| |
| |
(5) | In subsection (2) “affected transaction” means a transaction within— |
| 15 |
(a) | section 835(1) or (2) or 836(1) or (2), or |
| |
(b) | section 681AA(1) or (2) or 681AB(1) or (2) of ITA 2007. |
| |
| |
In the case of land outside the United Kingdom, expressions in this Chapter |
| |
relating to interests in land and their disposition must be taken to relate to |
| 20 |
corresponding interests and dispositions. |
| |
| |
New lease of land after assignment or surrender |
| |
| |
| 25 |
(1) | This Chapter provides that in certain circumstances where a lease of land is |
| |
assigned or surrendered and another lease is granted or assigned— |
| |
(a) | consideration received for the assignment or surrender of the first lease |
| |
is taxed as a trade receipt or charged to corporation tax on income, and |
| |
(b) | tax relief is allowed for rent under the other lease. |
| 30 |
(2) | The Chapter provides that in certain circumstances where a lease is varied it is |
| |
treated as surrendered and another lease is treated as granted. |
| |
Application of the Chapter |
| |
850 | New lease after assignment or surrender |
| |
(1) | This Chapter has effect if each of conditions A to E is met. |
| 35 |
| |
|
| |
|
| |
|
(a) | a company (“L”) is a lessee of land under a lease which has 50 years or |
| |
less to run (“the original lease”), and |
| |
(b) | L is entitled in respect of the rent under the original lease to a deduction |
| |
by way of relevant corporation tax relief. |
| |
| 5 |
(a) | L assigns the original lease to another person or surrenders it to L’s |
| |
| |
(b) | the consideration for the assignment or surrender would not (apart |
| |
from this Chapter) be taxable except as capital in L’s hands. |
| |
| 10 |
(a) | another lease (“the new lease”) is granted, or assigned, to L or a person |
| |
| |
(b) | the new lease is for a term of 15 years or less. |
| |
(5) | Condition D is that the new lease— |
| |
(a) | is of all or part of the land which was the subject of the original lease, or |
| 15 |
(b) | includes all or part of the land which was the subject of the original |
| |
| |
(6) | Condition E is that neither L nor a person linked to L had, before 22 June 1971, |
| |
a right enforceable at law or in equity to the grant of the new lease. |
| |
(7) | If each of conditions A to D is met but condition E is not met, see the relevant |
| 20 |
provisions in Schedule 2 to this Act and Schedule 9 to TIOPA 2010. |
| |
Taxation of consideration |
| |
851 | Taxation of consideration |
| |
(1) | An appropriate amount must be found under subsection (3) or (4) of— |
| |
(a) | the consideration received by L for the assignment or surrender, or |
| 25 |
(b) | each instalment of the consideration (if it is paid in instalments). |
| |
(2) | For the purposes of the Corporation Tax Acts the appropriate amount must be |
| |
treated in accordance with subsections (6) to (8) and not as a capital receipt. |
| |
(3) | If the term of the new lease is one year or less, the appropriate amount of the |
| |
consideration or instalment is the whole of it. |
| 30 |
(4) | If the term of the new lease is more than one year, the appropriate amount of |
| |
the consideration or instalment is the proportion of it found by the formula—![equation: over[plus[num[16.0000000000000000,"16"],minus[char[N]]],num[15.0000000000000000,
"15"]]](missing.gif) |
| |
(5) | In subsection (4) N is the term of the new lease expressed in years (taking part |
| |
of a year as an appropriate proportion of a year). |
| |
(6) | The way the appropriate amount must be treated depends on whether the |
| 35 |
following conditions are met— |
| |
(a) | the consideration is received by L in the course of a trade, and |
| |
(b) | the rent payable by L, or a person linked to L, under the new lease is |
| |
allowable as a deduction in calculating profits or losses of a trade, |
| |
profession or vocation for tax purposes. |
| 40 |
|
| |
|
| |
|
(7) | If the conditions are met the appropriate amount must be treated as a receipt |
| |
of the trade mentioned in subsection (6)(a). |
| |
(8) | If the conditions are not met the appropriate amount must be treated as an |
| |
amount chargeable to corporation tax under the charge to corporation tax on |
| |
| 5 |
852 | Position where new lease does not include all original property |
| |
(1) | This section applies for the purposes of section 851 if the property which is the |
| |
subject of the new lease does not include all the property which was the subject |
| |
| |
(2) | The consideration received by L must be treated as reduced to the portion of it |
| 10 |
found under subsection (3). |
| |
(3) | The portion is that which is reasonably attributable to such part of the original |
| |
| |
(a) | consists of the property which is the subject of the new lease, or |
| |
(b) | is included in the property which is the subject of the new lease. |
| 15 |
(4) | The original property is the property which was the subject of the original |
| |
| |
Relief for rent under new lease |
| |
853 | Relief for rent under new lease |
| |
(1) | This section applies if the rent under the new lease is payable by a company |
| 20 |
within the charge to corporation tax. |
| |
(2) | This section also applies if— |
| |
(a) | Chapter 2 of Part 12A of ITA 2007 (provision for income tax |
| |
corresponding to this Chapter) has effect, and |
| |
(b) | the rent under the new lease is payable by a company within the charge |
| 25 |
| |
(3) | Any provision of CTA 2009 or ICTA providing for deductions or allowances by |
| |
way of corporation tax relief in respect of payments of rent applies in relation |
| |
to the rent under the new lease. |
| |
(4) | In subsection (2), and in subsection (3) as applied by subsection (2), references |
| 30 |
to the new lease and rent are to be read as in Chapter 2 of Part 12A of ITA 2007. |
| |
New lease treated as ending |
| |
854 | New lease treated as ending |
| |
(1) | Sections 855 to 857 treat the new lease as ending in certain circumstances for |
| |
the purposes of this Chapter. |
| 35 |
(2) | If any of those provisions apply in a given case, and the new lease is treated as |
| |
ending on different dates, it must be treated as ending on the earlier or earliest |
| |
| |
|
| |
|