Except as otherwise expressly provided, the profits of a Schedule A business are computed in the same way as the profits of a trade are computed for the purposes of Case I of Schedule D.

The following provisions apply in accordance with subsection (1)—

• section 72 (apportionment);

• the provisions of Chapter V of Part IV (computational provisions relating to the Schedule D charge), except as mentioned in subsection (4) below;

• section 577 (business entertainment expenses);

• section 577A (expenditure involving crime);

• sections 579 and 580 (redundancy payments);

• F11section 588 (training courses for employees);

• F12section 589A (counselling services for employees);

• section 73(2) of the M6Finance Act 1988 (consideration for restrictive undertakings);

• section 43 of the M7Finance Act F131989 (Schedule D: computation);

• section 76 of that Act (expenses in connection with non-approved retirement benefit schemes);

• F14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• sections 42 and 46(1) and (2) of the Finance Act 1998 (provisions as to computation of profits and losses).

Section 74(1)(d) of this Act (disallowance of provisions for future repairs) applies in relation to a Schedule A business as if the reference to premises occupied for the purposes of the trade were to premises held for the purposes of the Schedule A business.

The following provisions in Chapter V of Part IV of this Act do not apply, or are excepted from applying, in accordance with subsection (1)—

• F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• section 87 (treatment of premiums taxed as rent),

• F16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• section 98 (tied premises: receipts and expenses treated as those of trade).

Part 1 of Schedule 22 to the Finance Act 2001 (deduction for capital expenditure on remediation of contaminated land) applies in accordance with subsection (1), and the other Parts of that Schedule (further provision as to relief for remediation of contaminated land) have effect in relation to a Schedule A business in accordance with their provisions.

The following provisions have effect for the purpose of applying the charge to F19corporation tax under Schedule A in relation to mutual business.

The transactions or relationships involved in mutual business are treated as if they were transactions or relationships between persons between whom no relationship of mutuality existed.

Any surplus arising from the business is regarded as a profit (and any deficit as a loss) if it would be so regarded if the business were not mutual.

F20The company to which the profit arises is the company which would satisfy that description if the business were not mutual business.

Nothing in this section affects the operation of section 488 (co-operative housing associations).

M1In this Part, except where the context otherwise requires—

• “lease” includes an agreement for a lease, and any tenancy, but does not include a mortgage or heritable security, and “lessee”, “lessor” and “letting” shall be construed accordingly;

• “lessee” and “lessor” include respectively the successors in title of a lessee or a lessor;

• “premises” includes any land; and

• “premium” includes any like sum, whether payable to the immediate or a superior landlord or to a person connected (within the meaning of section 839) with the immediate or a superior landlord.

M2For the purposes of this Part, any sum (other than rent) paid on or in connection with the granting of a tenancy shall be presumed to have been paid by way of premium except in so far as other sufficient consideration for the payment F8can be shown to have been given.

M3Where paragraph (c) of section 38(1) applies, the premium, or an appropriate part of the premium, payable for or in connection with either lease mentioned in that paragraph may be treated as having been required under the other.

References in this section to a sum shall be construed as including the value of any consideration, and references to a sum paid or payable or to the payment of a sum shall be construed accordingly.

M4In the application of this Part to Scotland—

• “assignment” means an assignation;

• “intermediate landlord” means, where an occupying lessee is a sub-lessee, any person for the time being holding the interest of landlord under a sub-lease which comprises the property of which the occupying lessee is sub-lessee, but does not include the immediate landlord;

• “premium” includes in particular a grassum payable to any landlord or intermediate landlord on the creation of a sub-lease; and

• “reversion” means the interest of the landlord in the property subject to the lease.

F9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .