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Lease premium deduction

Lease premium deduction when lease sold

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I have a limited company client who has ceased trading and as part of an asset sale they have transferred the remaining period of a 10 year lease to the new owners for no value. Relief has been claimed to date under s62 CTA 2009, however at disposal date there are approx 5 years left on the lease and a residual amount of circa £100k which would have ordinarly been claimed over the remaining 5 years of the lease (£20k pa). I am unsure as to whether it is as simple as claiming the remaining £100k in the final cessation tax computations as a revenue deduction since the company received no proceeds. Any help would be much appreciated.

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By Tax Dragon
02nd Nov 2021 07:19

If that's what s62, s63 etc say, then that's what you do.

(I have restricted my comment to the question you asked. You haven't mentioned the other tax consequences, so I assume you are happy in that regard.)

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By millertime
02nd Nov 2021 08:54

Hi Tax Dragon, please would you point me to the relevant tax parts within s62 / 63 as I am struggling, again with regard to the other tax consequences perhaps you could explain what you are referring to. Apologies this is not an area I come across very often.

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By Tax Dragon
02nd Nov 2021 14:19

I misread your OP this morning, overlooking the 'new' prefixing 'owners'. I thought you had a transfer at undervalue. What you seem to have instead is blatant manipulation of the allocation of the purchase consideration done in order to reduce tax.

Unless I'm wrong, I'll limit my further contribution to pointing you at CG71200.

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By millertime
02nd Nov 2021 14:32

Thanks for the reply Tax Dragon, the company has substantial losses and nothing has been done to manipulate the tax position. No proceeds were received as the company was simply happy to take a hit and get out of the lease. There is no connection between the parties. Whether the balance is allowable as a revenue or capital deduction will not affect the final tax position. I was just trying to ascertain the correct treatment. Thanks for your replies.

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