Corporation Tax Act 2010 section 844

Commercial rent: comparison with rent under a lease

Section 844 defines what "commercial rent" means for the purpose of comparing the rent actually paid under a sale-and-leaseback arrangement with the rent that would be expected in an arm's length transaction.

• Commercial rent is the rent that would be expected under a hypothetical open-market lease of the same land, negotiated at the time the actual lease was created
• The hypothetical lease must match the actual lease in duration and in its terms for maintenance and repairs
• Rent under the hypothetical lease must be payable at uniform intervals and at an "appropriate rate" — meaning either a uniform rate or, where the actual lease has a progressive rate, gradations proportionate to the actual lease
• This definition applies when comparing actual rent against commercial rent under the deduction-limiting rules in sections 838 and 839, where a transferor or associate has become liable to pay rent following a land transfer