Section 916: Assignments on which neither a gain nor a loss accrues
2714.This section deals with the assignment of a lease in circumstances which are regarded for the purposes of corporation tax on chargeable gains as giving rise to neither a gain nor a loss. It is based on paragraph 7 of Schedule 12 to FA 1997.
2715.Paragraph 7(2) of Schedule 12 to FA 1997, on which subsection (2) is based, provides for a period of account of the assignor to end and a period of account of the assignee to begin with the assignment.
2716.Paragraph 7(3) of Schedule 12 to FA 1997 provides that the assignee takes over the assignor’s “unused cumulative accountancy rental excess” or “unused cumulative normal rental excess”.
2717.These “unused” cumulative excesses are the aggregate of the cumulative rental excess for the period of the assignor which ends with the assignmentand any rental excess for that period.
2718.But the combined effect of section 915(2) (basedon paragraph 12(5) of Schedule 12 to FA 1997) and subsection (2) is that the period of account of the assignor which ends with the assignment is infinitesimally short. There can, therefore, in practice be no accountancy rental excess or normal rental excess for that period.
2719.Accordingly, in rewriting paragraph 7(3) of Schedule 12 to FA 1997 in subsections (3) and (4), the provision has been simplified by referring only to the cumulative accountancy rental excess or the cumulative normal rental excess for that period.
2720.Subsection (5) ensures that the division of the income tax provisions in Part 11A of ITA and the corporation tax provisions in this Part works as intended.
