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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: Lease changes: catching-up charge - deemed periods of account - cumulative excesses

The catching-up charge under CTA10?S923 is in addition to any actual charge under CTA10/S905 (see BLM70801) for the period from the time the lease first comes within Chapter 2 of Part 21 of CTA 2010 to the (actual) end of the period of account in question. To avoid complications concerned with the set-off of cumulative excesses not only is a period of account deemed to end immediately before the time the lease first comes within Part I but also immediately afterwards. The effect is to segregate the catching-up charge in its own brief period of account.

These deemed periods of account only exist for the purposes of Part 21 and not for any wider purposes. Thus in a case where the lease first comes within Chapter 2 in the middle of an actual period of account the rental income recognised under CTA10/S923 is added to any current rental income recognised under CTA10/S905 and the total brought into account in the computation for the accounting period (or year of assessment in an income tax case) corresponding to the actual period of account.