The effect of recognising for any period of account the
higher of the accountancy rental earnings or the normal rent is
that, without specific provision, more rental income may ultimately
be recognised over the period of the lease than is actually
received. In the case of a lease within part I Schedule 12 some of
that excess will represent income which but for Schedule 12 would
have been turned into capital. But the balance has to be excluded
from double taxation. This is achieved by the rules in
FA97/Sch12/Para6. See
BLM72000 onwards for a detailed account
of those rules.
