Corporation Tax Act 2009

Reverse premiums as receipts

250 Reverse premiums

(1) This section applies if—

(a) a company receives a reverse premium, and

(b) the reverse premium is not brought into account under section 98(2) in calculating the profits of any trade carried on by the company.

(2) The company is treated as—

(a) entering into a transaction mentioned in section 205 (if the land to which the property transaction relates is in the United Kingdom) or section 206 (if that land is outside the United Kingdom), and

(b) receiving the reverse premium as a result of that transaction.

(3) Accordingly, the reverse premium is brought into account as a receipt in calculating the profits of the property business which consists of or includes that transaction.

(4) Subsection (5) applies if—

(a) two or more of the parties to the property arrangements are connected persons, and

(b) the terms of those arrangements are not such as would reasonably have been expected if those persons had been dealing at arm’s length.

(5) The whole amount or value of the reverse premium is brought into account in the period of account in which the property transaction is entered into.

(6) Expressions used in this section and sections 96 to 100 have the same meaning in this section as they do in those sections.