PIM2320 - Deductions: premiums paid: multiple taxpayers

Summary

Where a taxable premium etc. is paid there will often be a tax effect on at least two taxpayers. HMRC needs to check that there is agreement between the figures being used.

The lessor is taxable in respect of the premium paid.

The lessee may make a claim for relief for the premium paid:

• if the property is sublet or used (eg as an office) in a rental business under section 227 of the Corporation Tax Act 2009 (CTA09) or section 287 of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA05);
• if the property is used for a trade or profession under CTA09/S62 or ITTOIA05/S60.

If the information from the two sides does not agree - ITTOIA05/S302A or CTA09/S240

There is a statutory procedure to determine the taxable amount of a premium etc.

Under ITTOIA05/S302A (for income tax payers) or CTA09/S240 (for corporation tax payers), HMRC may give a provisional notice of the amount we consider to be taxable to the parties affected. Any party affected can object to the notice within 30 days. Objections should be dealt with following the usual appeals process. If there are no objections, HMRC will make a determination in line with the provisional notice.

Advice from the Valuation Office Agency

You may need assistance from the Valuation Office Agency when the case concerns the tenant being required to carry out work under the terms of the lease. The charge is on the difference in the value of the landlord’s interest in the property resulting from the work done, see PIM1212 and PIM1232.

Assignment of lease granted at undervalue

If you are dealing with the assignment of a lease granted at undervalue, as described in PIM1222, the interested parties who are entitled to be involved in the process in ITTOIA05/S302A and CTA09/S240 may include the new assignee, the assignor and previous holders of the lease.