Three-year review – less tax payable
The effective date of a 20 year lease of a retail unit for a turnover-based rent estimated at £250,000 per annum was 31 August 2015. The net present value (NPV) is calculated using the £250,000 payable in each of the 20 years.
An LBTT return was submitted and resultant tax of £34,031 paid, based on the calculated NPV.
The date of the first three-year review will be 31 August 2018, that being the day of the third anniversary of the effective date of the lease. A review return must be submitted no later than 30 September 2018.
The tenant must recalculate the NPV using the actual rent payable for the first three years along with the projected rent for the remaining term.
The actual amount of rent paid in the first three years was £200,000 per annum, and the estimate of the rent payable for the remaining term will be reassessed in line with this. The recalculated NPV gives rise to £26,924 LBTT.
As £34,031 was paid on the original transaction, a repayment claim of £7,107 can be made on the three-year review return.
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