Chapter CG72328
| Published date | 12 March 2016 |
| Record Number | CG72328 |
| Court | HM Revenue & Customs |
| Issuer | HM Revenue & Customs |
The guidance below considers the legislation applying to business tenancies in:
- England & Wales
- Northern Ireland and
- Scotland
This guidance then considers the Landlord & Tenant Act 1954 and the protection it affords.
In particular, the guidance considers:
- Security of tenure
- Grounds for refusal to grant a new tenancy
- Right to compensation
Finally the issue as to whether compensation received is chargeable to Capital Gains is considered, including:-
- Entitlement to compensation following a court application
- Entitlement to compensation where no court application is made
- Drummond v Brown; a case which considered statutory compensation.
2. Legislation applying to business tenancies England & Wales
Most business tenancies in England and Wales now operate under the protection of the Landlord & Tenant Act 1954 (L&TA 1954). There are certain exceptions, the most important being:
- Tenancies of licensed premises (prior to 11 July 1992), see CG72450
- Agricultural tenancies, see CG72380
- Tenancies for fixed terms of 6 months or less.
Northern Ireland
In Northern Ireland similar legislation is to be found in the Business Tenancies Act (NI) 1964 (BTA 1964). The instructions below apply to tenancies falling within the Business Tenancies Act (Northern Ireland) 1964, but the following points should be noted:
- Any reference to `the Court’ is, in Northern Ireland, a reference to the Lands Tribunal.
- Section 4 BTA 1964 is equivalent to Section 25 L&TA 1954.
- Section 5 BTA 1964 is equivalent to Section 26 L&TA 1954.
- Section 19 BTA 1964 is equivalent to Section 37 L&TA 1954.
- Section 10 BTA 1964 is equivalent to Section 37 L&TA 1954.
- Section 20 BTA 1964 is equivalent to Section 38A L&TA 1954.
Scotland
In Scotland, there is no similar legislation regulating business tenancies. Hence, the decision in Drummond v Brown has no application in Scotland.
3. L&TA 1954
Deciding whether compensation received for the loss of a business tenancy is chargeable to Capital Gains Tax can be difficult. A basic understanding of the relevant parts of the L&TA 1954 is needed. A brief description of the main provisions of that Act follows.
Security of tenure
Probably the most important consequence of a tenancy falling under the protection of the L&TA 1954 is the security of tenure which this provides to the tenant. Even though the tenancy will have been granted for a particular term, for example 10 years, the tenant will normally be entitled...
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