Commentary on Sections Overview Overview Section 66: Restrictions on section 63 expenses: lease premium receipts
263.This section restricts the expenses that section 65 treats a tenant as incurring, under section 63, by reference to the unreduced amount of a taxed receipt under a taxed lease if:
	a sublease has been granted out of the taxed lease; and
	in respect of the sublease, the unreduced amount of the taxed receipt reduces an amount which is brought into account as a receipt under Chapter 4 of Part 4 of this Act or the corresponding provisions in ITTOIA (the “lease premium receipt”).
This section is based on sections 87(5) and 87A of ICTA. The corresponding rule for income tax is in section 64 of ITTOIA.
264.The restriction in this section extends to cases where the unreduced amount of the taxed receipt reduces a lease premium receipt of an overseas property business. See Change 11 in Annex 1.
265.Section 63 treats the tenant as incurring an expense for each qualifying day in the receipt period of the taxed receipt relating to the taxed lease. The expense is calculated by reference to the unreduced amount of the taxed receipt.
266.If, in respect of the sublease, the unreduced amount of the taxed receipt is used to reduce:
	under section 228, the amount brought into account as a lease premium receipt under Chapter 4 of Part 4 of this Act; or
	under section 288 of ITTOIA, the amount brought into account as a lease premium receipt under Chapter 4 of Part 3 of ITTOIA,
this section makes a corresponding reduction to the amount of the expense which section 63 treats as incurred by the tenant for a qualifying day in the receipt period of the lease premium receipt.
267.Subsections (3) to (5) treat the tenant as incurring an expense for a qualifying day of the amount, if any, by which the “daily amount” of the taxed receipt exceeds:
	the “daily reduction” of the lease premium receipt; or
	if the qualifying day falls within the receipt period of more than one lease premium receipt, the “total of the daily reductions” of those lease premium receipts.
268.This corresponds to the treatment in section 233 of cases where lease premium receipts, with overlapping receipt periods, are reduced by reference to the unreduced amount of a single taxed receipt. See Change 13 in Annex 1.
269.Subsection (6) contains formulas for calculating the “daily amount” of a taxed receipt and the “daily reduction” of a lease premium receipt. The subsection provides that the “daily reduction” only takes account of the taxed receipt in question. This corresponds to the treatment in section 233 of cases where more than one taxed receipt reduces a single lease premium receipt. See Change 13 in Annex 1.