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HMRC internal manual

Business Leasing Manual

HM Revenue & Customs
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’Income-into-capital’ schemes and back loaded leases: Back loaded leases: comparing accountancy rental earnings and normal rent

The effect of recognising for any period of account the higher of the accountancy rental earnings or the normal rent is that, without specific provision, more rental income may ultimately be recognised over the period of the lease than is actually received. In the case of a lease within Chapter 2 of Part 21 of CTA 2010 some of that excess will represent income which but for Part 21 of CTA 2010 would have been turned into capital. But the balance has to be excluded from double taxation. This is achieved by the rules in CTA10/SS906-910. See BLM72000 onwards for a detailed account of those rules.