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HMRC internal manual

Business Leasing Manual

‘Income-into-capital’ schemes and back loaded leases: Definition of a Chapter 2 of Part 21 of CTA 2010 lease: Condition D: computing normal rent within CT property income before 1 April 1998

To enable a fairer comparison to be made between ‘accountancy rental earnings’ and ‘normal rent’ for a period of account beginning before 1 April 1998, FA97/Sch12/Para3(6) and (7) provided a mechanism to spread ‘normal rent’ where it would otherwise be recognised for tax on the date on which it was receivable. Paragraph 3(6) of Schedule 12 FA 1997 was repealed with effect for periods of account beginning on or after 1 April 1998. Paragraph 3(7) of Schedule 12 FA 1997 is now at CTA10/S903(3) - (5).

Paragraph 3(6) dealt with the case where the rent from the lease in question was within property income as it applied for corporation tax for a period of account beginning before 1 April 1998. The entitlement basis provided by ICTA88/S15(1) for such periods was set aside for this purpose. Instead each payment of rent was spread evenly over the period to which it related under the lease, subject to the exception at BLM70610.