If a developer pays a (a mutually agreed) sum to a Regulated tenant, am I correct that for the tenant, it is treated as a capital gain but no tax payable as PRR will apply (even through tenant doesn't own the property, as it is their main residence, no CGT will arise (per CG64500 HMRC manual, a tenancy falls within s222).
For the developer, any payment will be treated as an enhancement to the asset (trading stock) - not a reverse premium, as the payment is to an individual (their home) not commercial or trade.
Does my thought process work? Has anyone come across this before?
Your thoughts and direction would be much appreciated.
Thanks in advance