Finance Leasing Manual - FLM21.09

Old Schedule A: anti-avoidance rules

The anti-avoidance rules in Sections 33A and 33B ICTA 1988 are explained in PIM5162. They apply, broadly, where a trading tenant gets relief for rent paid in arrear as it accrues under Case I of Schedule D (that is, spread over the three years for which the rent generates the right of occupation in accordance with normal accountancy practice) while, at the other end, a 'connected' lessor is taxable only in the last year on the 'entitlement' basis under Schedule A. The broad effect is to tax the lessor on the same amounts as the lessee deducts in its accounts.

If Sections 33A or 33B ICTA 1988 apply, they will operate before Schedule 12 FA 1997 comes into play, see FLM . However, lessors and lessees caught by Schedule 12 FA 1997 are likely to be unconnected.