If a freehold or leasehold interest in land is disposed of, on terms which include the provision that the purchaser will grant a lease of the whole or part of the land in question to the vendor, that should be treated as a part-disposal by the vendor. It should not be treated as two separate disposals, one by the vendor and one by the purchaser, see Sargaison v Roberts 45TC612.

The value of the interest which is retained by the vendor is the market value of the lease granted by the purchaser.

It is possible that a charge arises under ITTOIA05/S285 or CTA09/S225, see PIM1226. Note a charge does not arise if the lease is granted and begins to run within one month of the sale.

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