Section 101: Tax treatment of reverse premiums
411.This section treats a reverse premium as is a revenue receipt, rather than a capital item. It is based on paragraph 2 of Schedule 6 to FA 1999.
412.Subsection (2) is the rule for a trader. The reverse premium is treated as a receipt of the trade.
413.Subsection (3) is the rule for a non-trader. The reverse premium is treated as a receipt of a property business in accordance with section 311 of this Act.
414.If the transaction giving rise to the reverse premium is at arm’s length there is no statutory timing rule; the normal accountancy treatment applies. If the transaction is not at arm’s length, there is a timing rule in section 102.
