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HMRC internal manual

Property Income Manual

Deductions: premiums paid: liaison between offices


Where a taxable premium etc. is paid there will often be a tax effect on two taxpayers:

  • the recipient is taxable in respect of the premium received,
  • the payer may claim relief for the premium paid.

Where a case is being looked at critically, you should check that there is agreement between the figures being used.

Action in office dealing with lessee

The lessee may make a claim for relief:

  • under CTA09/S227 or ITTOIA05/S287 onwards if the property is sublet or used (eg as an office) in a rental business,
  • under CTA09/S62 or ITTOIA05/S60 onwards if the property is used for a trade or profession.

Where enquiries are necessary, first check whether you already have a form 289 in your file from the office dealing with the lessor. If you do and it agrees with the claim made by the lessee, you can allow the claim.

If there is no form 289 in your file, you must contact the lessor’s district. Write or send a form 288 with details of the payment for which relief is claimed then wait for the lessor’s office to confirm them. If the lessor is non-resident, contact CAR Residency, Bootle.

When you receive a form 289 from the office dealing with the lessor, you can settle your case. Keep the form in the Permanent Notes sub-file.

Action in office dealing with the lessor

  • You may have received the lessor’s return of rental business profits showing the receipt of a taxable premium etc., but you have not heard from the office dealing with the lessee. If so, contact them unless it is fairly clear that there will be no claim for relief by the lessee. (This might be because you know that the lessee is not subletting or using the premises for a business, or because the lessee is exempt.)
  • Alternatively, the lessee’s office might first contact you if they have received a claim for relief.

In either case, you have the responsibility of determining the amount chargeable. If the information from both sides agrees, send a form 289 showing the details to the office dealing with the lessee. Keep your copy of the form in the Permanent Notes.

Please click on the appropriate number for a copy of either form 288 or form 289.

If the information from the two sides does not agree

There is a statutory procedure to determine the taxable amount of a premium etc. and if necessary see the paragraph below. Let your colleagues in the other office know that you are taking action to obtain agreed figures, and keep them informed of progress.

Determination under ITTOIA05/S302A  or CTA09/S240

ITTOIA05/S302A  and CTA09/S240 enables both landlord and tenant (and any other affected persons) to participate in legal proceedings to determine the taxable amount of a premium or similar sum where such a determination may affect more than one person. The Officer is empowered to inform the persons whose tax liability may be affected by the determination of the taxable amount under Chapter 4 of Part 4 CTA09 or Chapter 4 of Part 3 ITTOIA05, of the amount he proposes to treat as taxable. Either party can object within 30 days. In the event of objection the chargeable amount is to be determined in the same way as an appeal, including the operation of the review provisions in TMA70/S49A-49I..

Where there is a discrepancy between the details from the two sides, the matter should be resolved by the office dealing with the landlord in the following way.

1) If there will be a charge on the landlord and corresponding relief for the tenant, HMRC has no material interest in the amount. Encourage the interested parties to negotiate an agreed amount. They are likely to find this preferable to arguing their respective points of view before the tribunal.

2) Failing agreement between the parties, an Officer should obtain all the facts and try to determine the correct taxable amount.

3) Send written notice to the parties of the determination of the taxable amount that you propose to make - ITTOIA05/S302A (2) or CTA09/S240 (2). You must also tell them of the rights they have under ITTOIA05/S302A or CTA09/S240, in particular the right to object and have the objection determined like an appeal.

4) If no objection is received within 30 days, your determination stands - ITTOIA05/S302A (5) or CTA09/S240 (5)

5) If one of the parties does object, the matter has to be dealt with in the same way as an appeal.

Advice from the Valuation Office Agency

You may need assistance from the Valuation Office Agency when the case concerns the tenant being required to carry out work under the terms of the lease. The charge is on the difference in the value of the landlord’s interest in the property resulting from the work done, see PIM1212 and PIM1232.

Assignment of lease granted at undervalue

If you are dealing with the assignment of a lease granted at undervalue, as described in PIM1222, the interested parties who are entitled to be involved in the ICTA88/S42 process may include the new assignee, the assignor and previous holders of the lease.