Ask an expert: Development of roof space

Question

My client is a company which manages real estate on a fee or contract basis. The company owns a freehold mansion block property subject to long leases granted to the tenants each of whom holds one ordinary share in the company. The company is planning to grant a 999 year lease of the roof space of the property to a developer who will construct a penthouse apartment together with a lift extension and a refurbishment of the common parts of the building. The developer will pay an initial sum for the grant of the lease and will undertake to carry out certain enabling works. My client will also receive a proportion of the sale proceeds of the developed apartment. What are the key tax issues for the company and the...