Income and Corporation Taxes Act 1988

Valid from 06/04/2005

[F2 37A Section 37(4) and reductions in receipts under ITTOIA 2005 U.K.

(1) This section applies if—

(a) in calculating the amount that falls to be treated as a receipt of a UK property business under Chapter 4 of Part 3 of ITTOIA 2005 (“the ITTOIA receipt”), there is a reduction under section 288 of that Act by reference to a taxed receipt, and

(b) the taxed receipt is the amount chargeable on the superior interest for the purposes of section 37.

(2) Section 37(4) shall apply for the period in respect of which the ITTOIA receipt arose only if the appropriate fraction of the amount chargeable on the superior interest exceeds the amount of the ITTOIA receipt given by the formula in section 277, 279, 280, 281 or 282 of ITTOIA 2005, as the case may be.

(3) Section 37(4) shall then apply as if the amount chargeable on the superior interest were reduced in the proportion which that excess bears to that appropriate fraction.

(4) Subsection (5) applies if—

(a) the ITTOIA receipt is in respect of a lease granted out of the taxed lease,

(b) the taxed lease is the head lease for the purposes of section 37, and

(c) the lease granted as mentioned in paragraph (a) does not extend to the whole of the premises subject to the head lease.

(5) Section 37(4) and subsections (2) and (3) above shall be applied separately to the part of the premises subject to the lease and to the remainder of the premises, but as if for any reference to the amount chargeable on the superior interest there were a reference to that amount proportionately adjusted.

(6) For the purposes of this section the appropriate fraction of the amount chargeable on the superior interest is the fraction—

where—

A is the period in respect of which the ITTOIA receipt arose, and

B is the period in respect of which the amount chargeable on the superior interest arose for the purposes of section 37.

(7) For the purposes of this section the period in respect of which an ITTOIA receipt arose is its receipt period (within the meaning of Chapter 4 of Part 3 of ITTOIA 2005 (see section 288(6))).

(8) In this section the following expressions have the same meaning as in Chapter 4 of Part 3 of ITTOIA 2005—

• “reduction under section 288 by reference to a taxed receipt” (see section 290(6) of that Act),

• “taxed lease” (see section 287(4) of that Act), and

• “taxed receipt” (see section 287(4) of that Act).

(9) In the application of this section to Scotland, references to a lease granted out of a taxed lease are to be construed as references to a sublease of land subject to the taxed lease.]

Textual Amendments

F2 S. 37A inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 21 (with Sch. 2)