Finance Leasing Manual - FLM31.68

Fourth condition: computing normal rent within CT Schedule A before 1 April 1998

To enable a fairer comparison to be made between 'accountancy rental earnings' and 'normal rent' for a period of account beginning before 1 April 1998 Paragraph 3(6) and (7) Schedule 12 FA 1997 provides a mechanism to spread 'normal rent' where it would otherwise be recognised for tax on the date on which it is receivable (for example, where the lessor is chargeable under Schedule A on the 'entitlement basis').

Paragraph 3(6) deals with the case where the rent from the lease in question is within Schedule A as it applies for corporation tax for a period of account beginning before 1 April 1998. The entitlement basis provided by Section 15(1) Schedule A (2) ICTA 1988 for such periods (see PIM 5040) is set aside for this purpose. Instead each payment of rent is spread evenly over the period to which it relates under the lease, subject to the exception at FLM31.69.