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- Point in Time (06/04/2006)
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Version Superseded: 01/04/2009
Point in time view as at 06/04/2006.
There are currently no known outstanding effects for the Income Tax (Trading and Other Income) Act 2005, Cross Heading: Effective duration of lease.
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(1)The following rules apply for determining the effective duration of a lease for the purposes of this Chapter.
Rule 1: A lease is not to be treated as having been granted for a term longer than one ending on a date before the end of the term for which the lease was granted if—
(a)—the terms of the lease or any other circumstances make it unlikely that the lease will continue beyond that date, and
(b)—the premium was not substantially greater than it would have been had the term been one ending on that date.
Rule 2: If the terms of the lease include provision for the extension of the lease beyond a given date by notice given by the tenant, account may be taken of any circumstances making it likely that the lease will be so extended.
Rule 3: If the tenant or a person connected with the tenant is, or may become, entitled to a further lease or the grant of a further lease (whenever commencing)—
(a) of the same premises, or
(b) of premises including the whole or part of the same premises,
the term of the lease may be treated as continuing until the end of the term of the further lease.
(2)The rules are to be applied in accordance with section 304.
(3)In this section and section 304, in relation to Scotland, “term”, where referring to the duration of a lease, means period.
Modifications etc. (not altering text)
C1S. 303 applied by 2001 c. 2, s. 360I(3)(a) (as inserted (7.4.2005 with effect in relation to expenditure incurred on or after 11.4.2007) by Finance Act 2005 (c. 7). s. 92, {Sch. 6 para. 1}; S.I. 2007/949, art. 2
(1)The rules in section 303 apply by reference to the facts known or ascertainable—
(a)at the time of the grant of the lease, or
(b)if the determination is for the purposes of section 281 (sums payable for variation or waiver of term of lease), at the time when the contract for the variation or waiver is entered into.
(2)In applying those rules, it is assumed that all parties concerned, whatever their relationship, act as if they were at arm's length.
(3)Subsection (5) applies if—
(a)special benefits were conferred by the lease or in connection with its grant, or
(b)payments were made which one would not expect to be made by parties acting at arm's length unless such benefits had been conferred.
(4)But subsection (5) does not apply if it can be shown that the special benefits were not conferred nor the payments made for the purpose of securing a tax advantage in the application of this Chapter or sections 34 to 39 of ICTA (premiums, leases at undervalue etc.).
(5)In applying rule 1 in section 303, it is assumed that the special benefits would not have been conferred nor the payments made if the lease had been granted for a term ending on the date mentioned in that rule.
(6)In this section “special benefits” means benefits other than—
(a)vacant possession and beneficial occupation of the premises, or
(b)the right to receive rent at a reasonable commercial rate in respect of the premises.
(1)This section applies if [F1an officer of Revenue and Customs][F2has] reason to believe that a person has information relevant to the determination of the effective duration of a lease.
(2)[F1an officer of Revenue and Customs] may by notice require the person to provide such information on the matters specified in the notice as is in the person's possession.
(3)The information must be provided within a time specified in the notice.
(4)In relation to anything done by a solicitor on behalf of a client, the solicitor is required only to—
(a)state that the solicitor was acting on behalf of a client, and
(b)provide the name and address of the client.
Textual Amendments
F1Words in s. 305(1)(2) substituted (18.4.2005) by Commissioners for Revenue and Customs Act 2005 ss. 50, 53(1), {Sch. 4 para. 132(1)}; S.I. 2005/1126, art. 2(h)
F2Word in s. 305(1) substituted (18.4.2005) by Commissioners for Revenue and Customs Act 2005 ss. 50, 53(1), {Sch. 4 para. 133(3)}; S.I. 2005/1126, art. 2(h)
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