Corporation Tax Act 2009 section 223

Provisions supplementary to section 222

Section 223 provides supplementary definitions and tests for determining when a lease has been granted at an undervalue and when a profit has been made on its assignment, in support of section 222.

• A lease is granted at an undervalue if the landlord could have required a higher premium (or an additional premium) at the time of granting, and the difference is the undervalue
• The undervalue test is based on market values prevailing at the time the lease was granted, assuming arm's length negotiations
• A profit arises on assignment if the consideration received exceeds the original premium (if never previously assigned) or the consideration paid on the most recent previous assignment
• The amount by which the assignment consideration exceeds the original premium or last assignment consideration is the taxable profit