Commentary on Sections Overview Overview Section 228: The additional calculation rule
836.This section provides for the amount of a deemed business property receipt to be reduced, in cases within section 227, by reference to an earlier taxed receipt. It is based on section 37(2), (3), (7) and (9) of ICTA. The corresponding provision for income tax is in section 288 of ITTOIA.
837.The amount to be reduced is referred to in this section, and in section 229, as “the receipt under calculation”.
838.Section 227 extends relief to deemed business property receipts arising in relation to the variation or waiver of the terms of a lease. Subsection (2) reflects this by referring to section 221. See Change 46 in Annex 1.
839.This section introduces the label “basic relieving amount” for the amount by which the receipt under calculation is to be reduced.
840.Subsection (3) requires the basic relieving amount to be restricted under section 229(5) so that it does not exceed the amount of the receipt under calculation. Source legislation is not as explicit about what happens if relief is given in relation to more than one earlier taxed receipt. If there is more than one taxed receipt by reference to which the receipt under calculation may be reduced, it is for the company entitled to the relief to decide the order in which relief is to be taken by reference to those taxed receipts.
841.For subsection (3) to apply there must be at least one taxed receipt with an “unused amount”. That is because section 235 (limit on reductions and deductions) prevents relief under this section being given by reference to a taxed receipt if that taxed receipt does not have an unused amount. Source legislation is not as explicit about the way in which relief in relation to a taxed receipt must not exceed the amount of the taxed receipt. See Change 49 in Annex 1.
842.Subsection (4)’s use of the “unreduced amount” of the taxed receipt (defined in section 230(2)) in the formula makes clear that the basic relieving amount by reference to a taxed receipt is to be calculated according to the amount of that receipt before any reductions or deductions.
843.The definition in subsection (6) of “receipt period” in relation to a receipt under sections 217 and 219 to 222 is based on the definition of “the period in respect of which an amount arose” in section 37(7)(b) of ICTA.