HMRC commented on the application of FA97/Sch12/Para5 to new
leases within Part II in the article on Schedule 12 published in
the April 1997 issue of Tax Bulletin:
`In the case of new leases to which Part II does apply, we take the view that 'negative depreciation' is taxable primarily by virtue of paragraph 5 of Schedule 12 (as applied to Part II by paragraph 16 of Schedule 12) and not under general tax law. This will ensure that relief for 'cumulative accountancy rental excess' will be available in accordance with the Schedule’.
