PART IIU.K.[F1PROVISIONS RELATING TO THE SCHEDULE A CHARGE]

Textual Amendments

F1Pt. 2 heading substituted (with effect as mentioned in s. 38(2)(3) of the amending Act) by Finance Act 1998 (c. 36), s. 38(1), Sch. 5 para. 3 (with Sch. 5 para. 73)

Premiums, leases at undervalue etcU.K.

35[F2Charge] on assignment of lease granted at an undervalue. U.K.

(1)M1This section applies to any lease of a duration not exceeding 50 years where the terms subject to which it was granted are such that the grantor, having regard to values prevailing at the time it was granted and on the assumption that the negotiations for the lease were at arm’s length, could have required the payment of an additional sum by way of premium, or additional premium, for the grant of the lease; and in this section any such additional sum is referred to as the “amount foregone”.

(2)On any assignment of a lease to which this section applies for a consideration—

(a)where the lease has not previously been assigned, exceeding the premium, if any, for which it was granted, or

(b)where the lease has been previously assigned, exceeding the consideration for which it was last assigned,

the amount of the excess, in so far as it is not greater than the amount foregone reduced by the amount of any such excess arising on a previous assignment of the lease, shall in the same proportion as the amount foregone would, under section 34(1), have fallen to be treated as rent if it had been a premium under the lease, be [F3deemed to have been received as income by the assignor and to have been received by [F4the assignor in consequence of the assignor's] having entered into a transaction falling to be treated as mentioned in paragraph 1(2) of Schedule A.]

[F5(2A)An amount deemed under this section to have been received as income by the assignor—

(a)is treated as received when the consideration mentioned in subsection (2) becomes payable, and

(b)shall be taken into account in computing the profits of the Schedule A business in question for the [F6accounting] period in which it is treated as received.]

(3)M2If there is submitted to the inspector, by the grantor or any assignor or assignee of the lease, a statement showing whether or not a charge to [F7corporation tax] arises or may arise under this section and, if so, the amount on which the charge arises or may arise, then, if the inspector is satisfied as to the accuracy of the statement, he shall certify the accuracy thereof.

Textual Amendments

F2S. 35: word in sidenote substituted (with effect as mentioned in s. 38(2)(3) of the amending Act) by Finance Act 1998 (c. 36), s. 38(1), Sch. 5 para. 16(2) (with Sch. 5 para. 73)

F3Words in s. 35(2) substituted (with effect as mentioned in s. 38(2)(3) of the amending Act) by Finance Act 1998 (c. 36), s. 38(1), Sch. 5 para. 16(3), (with Sch. 5 para. 73)

F4Words in s. 35(2) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 18(2) (with Sch. 2)

F5S. 35(2A) inserted (with effect as mentioned in s. 38(2)(3) of the amending Act) by Finance Act 1998 (c. 36), s. 38(1), Sch. 5 para. 16(4), (with Sch. 5 para. 73)

F6Words in s. 35(2A)(b) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 18(3) (with Sch. 2)

F7Words in s. 35(3) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 18(4) (with Sch. 2)

Modifications etc. (not altering text)

C1 See 1979(C) s.106and Sch.3 para.6(2)—1979(C) s.31 (exclusion from capital gains computation of sums charged to income tax or corporation tax)not to apply to amounts on which tax paid under s.35.

C3S. 35(2) modified (with effect in accordance with s. 39(4)(5) of the modifying Act) by Finance Act 1995 (c. 4), s. 39(3), Sch. 6 para. 10

Marginal Citations

M1SOURCE-1970 s. 81(1)

M2SOURCE-1970 s. 81(2)