Three-year review – more tax payable

Worked example for LBTT6014 - three-year review of the tax chargeable.

The effective date of a ten year lease of a wind farm let on a turnover-based rent estimated at £100,000 per annum was 1 May 2015. The net present value (NPV) is calculated using the £100,000 payable in each of the 10 years.

An LBTT return was submitted and tax of £6,816 paid based on the calculated NPV.

The date of the first three-year review will be 1 May 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 31 May 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 £120,000 per annum and the estimate of the rent payable for the remaining term has been reassessed in line with this. The recalculated NPV gives rise to tax of £8,479.

As £6,816 was paid in relation to the original LBTT return, a further £1,663 of tax must be paid at the same time as the review return is made, on or before 31 May 2018.

Last updated: 
6 February 2018
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