Subsection (1) says that this section applies to any lease of duration not exceeding 50 years where the grantor of a lease could have, based on arm's length rates at the time the lease was granted, required the tenant to pay additional amounts by way of premium. Such amounts are referred to as the amount foregone.
Subsection (2) provides that where this section applies to a lease, and the lease is later assigned for a consideration greater than any premiums for the grant of the lease (if it has not previously been assigned), or for a consideration greater than any premium for the last assignment (otherwise), the lower of the amount of the excess and the amount foregone less excesses on previous assignments, is treated as additional rent by the assignor.
Subsection (2A) says that such amounts are deemed to be received when the consideration for the assignment becomes payable and is taken into account when determining rental income in the accounting period in which it is received.
Subsection (3) allows the grantor, assignor or assignee of a lease to make a statement to the Inspector of Taxes of what corporation tax, if any, is due under this section. If the Inspector is satisfied that the statement is accurate, he shall certify it as accurate.