Corporation Tax Act 2009 section 227

Circumstances in which additional calculation rule applies

Section 227 identifies when a deemed property business receipt can be reduced by reference to an earlier receipt that has already been taxed, using the additional calculation rule in section 228.

• The additional calculation rule can reduce deemed property business receipts arising from lease premiums, sums payable instead of rent, sums for surrendering a lease, sums for varying or waiving lease terms, and assignments for profit of leases granted at undervalue.
• A "taxed lease" is one where a taxable receipt has already arisen (or would have arisen but for the additional calculation rule reducing it to nil), whether under corporation tax or income tax rules, including leases of land outside the UK.
• The rule only applies where two conditions are met: the later receipt must be connected to a taxed lease (Condition A), and at least one earlier taxed receipt must have an unused amount available for relief (Condition B).
• The required connection depends on the type of receipt: for premiums, sums instead of rent, or surrender payments, the new lease must be granted out of the taxed lease; for variation or waiver payments, the lease must have been granted out of a taxed lease; and for profitable assignments, the assignment must be of the taxed lease itself.