Corporation Tax Act 2009 section 228

The additional calculation rule

Section 228 provides a mechanism for reducing a deemed property business receipt (such as a lease premium charge) where there has been an earlier taxed receipt on the same or a superior lease, to prevent double taxation of overlapping amounts.

• Where the conditions in section 227 are met, the taxable amount of a deemed property business receipt must be reduced by a "basic relieving amount" calculated by reference to an earlier taxed receipt
• The basic relieving amount is calculated using the formula A × LRP / TRP, where A is the unreduced amount of the earlier taxed receipt, LRP is the receipt period of the current receipt, and TRP is the receipt period of the earlier taxed receipt
• If there is more than one earlier taxed receipt with an unused amount, the total of all the basic relieving amounts is deducted, but the overall reduction cannot exceed the amount of the receipt being calculated
• The "receipt period" varies depending on the type of deemed receipt — for example, it is the effective duration of the lease for a premium, the period covered by a lump sum paid instead of rent, or the remaining lease duration at the date of assignment