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HMRC internal manual

Business Income Manual

Specific receipts: reverse premiums: timing of the receipt: timing in the avoidance case

S102(3)-(5), S311(5) Income Tax (Trading and Other Income) Act 2005, S99(3)-(5). S250(5) Corporation Tax Act 2009

Where the avoidance case at BIM41130 applies, the trading receipt of property business receipt is not spread in accordance with generally accepted accounting practice. Instead, the general rule is that the whole of the reverse premium is brought into charge as a revenue receipt of the period in which the property transaction (see BIM41051) is entered into.

There is one exception to this general rule. It applies where the reverse premium is received for a lease of premises to be occupied for the purposes of a trade that has not yet begun. In such a case, the full amount is brought into account in the first period of account in which the trade is carried on.