BIM41135 - Receipts: reverse premiums: timing of the charge: the avoidance case: when to impose the charge

In an FA99/SCH6/PARA3, ITTOIA05/S102 or ITTOIA05/S311 (4) case (see BIM41130) the charge is not spread in accordance with generally accepted accounting practice. Instead, the general rule is that the whole of the reverse premium is brought into charge as a revenue receipt of the period in which the relevant transaction (see BIM41095) is entered into (FA99/SCH6/PARA3 (2), ITTOIA05/S102 (3) and ITTOIA05/S311 (5)).

There is one exception to this general rule. It applies where the reverse premium is received for a lease of premises to be occupied for the purposes of a trade, profession or vocation that has not yet begun. In such a case, the full amount is brought to account in the first period of account after commencement (FA99/SCH6/PARA3 (3) and ITTOIA05/S102 (5)).