Where having acquired the freehold, a tenant immediately sells
the freehold but subject to a leaseback giving him or her
continuing occupation rights it is doubtful whether a trading
argument is possible.
This is because the tenant has not realised the potential
marriage profit in the context of
BIM60105. The tenant has acquired an
encumbered asset (the freehold subject to a tenancy) and sold an
encumbered asset (the freehold subject to the leaseback). Having
established a position of being able to realise the marriage profit
by a sale of the freehold the tenant has foregone the opportunity.
This is almost certain to be for genuine 'capital' reasons - the
desire to change landlords or secure more advantageous lease terms
for example.
A trading argument in these circumstances will only be
possible if, exceptionally, the lease back is for a materially
shorter time than the original lease was due to run.
Note that where there is a sale and leaseback the
anti-avoidance provisions at ICTA88/S779 should be considered (see
BIM61301)
