Corporation Tax Act 2009 section 99

Arrangements not at arm's length

Section 99 sets out a special timing rule for taxing reverse premiums where the property arrangements are between connected persons and are not on arm's length terms.

• Where two or more parties to the property arrangements are connected persons and the terms differ significantly from what would be expected between independent parties dealing in the open market, a special timing rule applies.
• The entire amount or value of the reverse premium must be brought into account in the period of account in which the property transaction is entered into, rather than being spread over a longer period.
• Terms are considered not at arm's length if they differ to a significant extent from what would be regarded as normal and reasonable in the prevailing market conditions at the time the arrangements were made.
• If the recipient enters into the property transaction for the purposes of a trade that has not yet started, the reverse premium is instead brought into account in the first period of account in which the recipient carries on that trade.