BIM41140 - Receipts: reverse
premiums: specific exclusions not chargeable
Certain inducements, which would otherwise satisfy the
definition of reverse premium charged by the legislation, are
specifically excluded. They are:
- Reverse premiums received by individuals
where the interest taken is in premises to be occupied as an only
or main residence. The exclusion does not extend to second homes
(FA99/SCH6/PARA6 and ITTOIA05/S100 (2)).
- Any payment or benefit to the extent that
it is consideration for the grant or assignment of an interest in
land as the first step in an ordinary sale (or lease) and leaseback
transaction. For example, a trader might decide to raise money by
selling trading premises at open market value, but continue to
occupy by leasing them back for a commercial rent. There might
conceivably be an argument that the sale price received was an
‘inducement’ to the trader to take the lease back. The
legislation puts beyond doubt that the reverse premium charge will
not apply in such circumstances. For this purpose, the definition
of sale and leaseback is a transaction such as described in
ICTA88/S779 (1) or (2) or ICTA88/S780 (1), (FA99/SCH6/PARA7 and
ITTOIA05/S100 (3)).
