Corporation Tax Act 2010 section 842

Payments made for later periods

Section 842 prevents a taxpayer from avoiding the restriction on deductions under section 839 by labelling bunched-up payments as being made for later periods rather than the period in which they are actually paid.

• This section supplements sections 839 to 841, which restrict tax deductions for payments connected with transferred land to no more than a commercial rent.
• The "relevant year" for any payment is the one-year period starting from the date the payment is actually made.
• If a payment is stated as being for a period that falls entirely after the relevant year, the payment is nevertheless treated as made for the relevant year.
• If a payment is stated as being for a period that only partly falls after the relevant year, a proportionate part of the payment is reassigned to the relevant year, with no portion treated as relating to any later period.