Corporation Tax Act 2010 section 835

Transferor or associate becomes liable for payment of rent

Section 835 sets out the conditions under which anti-avoidance rules apply to limit corporation tax deductions for rent payments in sale-and-leaseback arrangements involving land.

• Where land is transferred and the transferor (or an associated company) leases it back and claims a corporation tax deduction for the rent, the deduction is capped at the commercial rent level under section 838
• A parallel rule under section 839 applies the same cap where the rent deduction is claimed as a management expense by an insurance company carrying on basic life assurance and general annuity business
• The concept of "transfer" is broadly defined to include granting leases, surrendering or forfeiting leases, and any transactions that change the ownership structure of the land
• These rules only apply to transfers made after 14 April 1964, and the rent liability must arise at or after the time of the transfer