Income Tax (Trading and Other Income) Act 2005 section 67

Restrictions on section 61 expenses: corporation tax receipts under ICTA

Section 67 ensures that where a corporation tax receipt arises from a lease premium and a reduction has been given under the old ICTA rules, that reduction is properly taken into account when calculating the trading expense deduction available under section 61.

• Where a sub-lease has been granted out of a taxed lease and a corporation tax receipt arises that has been reduced under the old ICTA section 37 rules by reference to the amount chargeable on the superior interest, this section applies to coordinate the relief given under section 61.
• The corporation tax receipt is treated as if it were a lease premium receipt for the purposes of the restriction rules in sections 64 and 65, and the receipt period is determined by the duration of the lease (or, in the case of an assignment, the remaining duration at the date of assignment).
• A corporation tax receipt exists for these purposes where a Schedule A business or overseas property business receipt arose under ICTA section 34 or 35 for an accounting period ending after 5 April 2005 but before 1 April 2009, or would have arisen but for the reduction under ICTA section 37(2) or (3).
• The reduction under ICTA section 37(2) or (3) is measured as the difference between the corporation tax receipt before and after the operation of that provision, to the extent attributable to the amount chargeable on the superior interest.