Income Tax (Trading and Other Income) Act 2005 section 355

Transfer of rights if transferee does not carry on UK property business

Section 355 deals with the tax treatment when someone who has permanently stopped running a UK property business sells the right to receive future income from that business to another person who does not then carry on that business.

• When a person permanently ceases a UK property business and sells the right to receive future business income to someone who does not then carry on that business, the seller is treated as receiving a post-cessation receipt.
• If the sale is at arm's length, the post-cessation receipt equals the actual consideration paid; if it is not at arm's length, the receipt is the arm's length value of the rights transferred.
• Any sums the buyer actually collects under the transferred rights after the business has ceased are not treated as post-cessation receipts in the buyer's hands.
• This ensures the tax charge falls on the transferor at the point of sale, rather than on the transferee when the underlying income is eventually received.