BLM52020 | Right-of-use assets: right-of-use asset lessees: the spreading rules: transfer of a lease

If, before the whole of an amount of an adjustment has been treated as arising to a lessee,

• there is a transfer of all or part of a lease to a third person,

• the transferee is connected to the lessee,

• the transferee, immediately after the transfer, carries on activities the profits of which are chargeable to income tax or corporation tax, and

• the transfer is not one where it is reasonable to suppose that the transfer is, or arrangements of which it is part are, designed to avoid tax,

the amount which has not been treated as arising to the lessee is treated as arising to the transferee over so much of the spreading period as falls on or after the date on which the transfer takes place.

If apportionment of the adjustment amount is necessary (because, say, a portfolio of leases has been transferred to different persons, all of whom are connected to the lessee), any such apportionment should be made on a just and reasonable basis.

‘Connected’ is to be read in accordance with sections 993 and 994, ITA07 and sections 1122 and 1123, CTA10.