Commentary on Sections Overview Overview Section 227: Circumstances in which additional calculation rule applies
830.This section sets out cases where a deemed business property receipt is to be reduced, under section 228, by reference to an earlier taxed receipt. It is based on section 37(1), (2), (3) and (9) of ICTA. The corresponding provision for income tax is in section 287 of ITTOIA.
831.Subsection (1) provides that those cases include a deemed business property receipt arising in relation to payments for a variation or waiver of terms of a lease. See Change 46 in Annex 1.
832.Amounts within section 218 (amount treated as lease premium where work required) are not specified separately in subsection (1), or in section 228(2), because section 218(2) treats such amounts as premiums within section 217.
833.Subsection (3) sets out the connection that must exist between the lease in relation to which the taxed receipt arises and the lease in relation to which the later deemed business property receipt arises.
834.Subsection (4)’s definitions of “taxed lease” and “taxed receipt” are based on the definitions of “head lease” and “amount chargeable on the superior interest” in section 37(1) of ICTA. The definition of a taxed lease, and taxed receipt, includes leases of land, and associated receipts, outside the UK. This restores a relief that was incorrectly removed by ITTOIA. See Change 48 in Annex 1.
835.Subsection (5) stipulates that for section 228 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 being given under section 228 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.