Under ICTA88/SCH30/PARA2 the duration of a lease which included
a tenant's option to terminate was taken to be the period up to the
earliest date on which the lease could be determined under the
option. This was to prevent short leases being dressed up as long
leases with the object of reducing or avoiding the tax that would
otherwise be due from the recipient of the premium. It was not,
however, effective in preventing long leases being dressed up as
short leases with the object of giving the payer of the premium
relief to which they would not otherwise have been entitled.
ICTA88/S38 was introduced to prevent this type of abuse and
applies to leases entered into after 12 June 1969 (see PIM1206
onwards).
ICTA88/SCH30 contains provisions relating to leases entered
into before 13 June 1969 where relief due under ICTA88/S87 results
in the creation or increase of a trading loss.
