Income Tax (Trading and Other Income) Act 2005 section 304

Applying the rules in section 303

Section 304 explains how the rules for determining the effective duration of a lease (set out in section 303) should be applied in practice, including the timing of the assessment, the arm's length assumption, and the treatment of special benefits.

• The effective duration rules are applied based on facts known or ascertainable at the time the lease is granted, or when a contract for variation or waiver of lease terms is entered into
• All parties are assumed to be acting at arm's length, regardless of any actual relationship between them
• Where special benefits have been conferred or unusual payments made in connection with the lease, these are assumed not to have existed if the lease had been granted for a shorter term — unless it can be shown they were not designed to secure a tax advantage
• Special benefits are defined as anything beyond vacant possession, beneficial occupation of the premises, and the right to receive rent at a reasonable commercial rate

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