Entitlement to IBAs

Grant of an underlease is the sale of a relevant interest

The taxpayer was a director of HCL. The company bought a long lease of land on which it developed two industrial units. It granted the taxpayer an underlease of one of the units. He claimed industrial buildings allowances on the purchase price (CAA 2001 s 290). HMRC refused the claim on the ground that the taxpayer and HCL were connected persons (s 291(1)). The taxpayer accepted this but claimed the underlease was the sale of a relevant interest for the purpose of s 296.

The First-tier Tribunal agreed with the taxpayer that the legislation did not specify when the granting of a sublease might cause the relevant interest to cease to exist because it was a matter of degree. The legislation did not prescribe all the circumstances when a grant might amount to the transfer of a relevant...