Introduction Leases that continue after a fixed term
3.Paragraphs 2 and 3 amend paragraph 3 of Schedule 17A.
4.Paragraph 3 of Schedule 17A applies where a lease continues after the expiry of its fixed term. Currently, it provides that, where a lease continues after the end of its fixed term, it is treated as extended (in yearly increments). If any additional tax is due in respect of the extended lease, a return, together with the tax due, must be submitted to HMRC within 30 days after the expiry of the original (or previously extended) fixed term.
5.Paragraph 2 amends paragraph 3(3) of Schedule 17A to provide that, where a lease is treated as extended under that paragraph, notification of any additional tax due need not be given until 30 days after the end of the period of extension. It also provides that, where the lease is terminated before the end of the one-year period of extension, notification is required within 30 days of the date of termination. It also provides that no additional tax is due payable, and therefore no return is required under paragraph 3 where, during a period (or further period) of continuation, a new lease is granted in circumstances where paragraph 9A applies.
6.Paragraph 3 inserts a new paragraph 3A into Schedule 17A. Paragraph 3A provides, in essence, that paragraph 3 does not apply in cases where a new lease is granted within one year of the date of expiry of the original fixed term (or of any one-year extension). Instead, the new lease is treated as beginning immediately after that date. Any rent payable in relation to the extended lease is treated as payable under the new lease. It also provides that the paragraph (that is, paragraph 3A) does not apply where paragraph 9A applies. Paragraph 9A applies where a backdated lease is granted to a tenant holding over.
7.Paragraph 4 amends section 87 of FA 2003, by specifying “the relevant date” for the purpose of any interest payable on unpaid tax when paragraph 3(3) applies.
8.Paragraph 5 amends section 119(2) of FA 2003, by adding paragraph 3(4) of Schedule 17A to the list of provisions that provide for a different “effective date” from that set out in section 119(1).