Part 13Tax avoidance
Chapter 3Transactions in land
Charge on gains from transactions in land
755Charge to tax on gains from transactions in land
1
Income tax is charged on income treated as arising under section 756 (income treated as arising when gains obtained from some land disposals).
2
For exemptions from the charge, see—
section 765 (exemption: gain attributable to period before intention to develop formed),
section 766 (exemption: disposals of shares in companies holding land as trading stock), and
section 767 (exemption: private residences).
756Income treated as arising when gains obtained from some land disposals
1
This section applies if—
a
any of the conditions specified in subsection (3) is met as respects land,
b
a gain of a capital nature is obtained from the disposal of all or part of the land,
c
all or part of the land is situated in the United Kingdom, and
d
a person within section 757(1)(a), (b) or (c) obtains the gain.
2
The gain is treated for income tax purposes as income arising when the gain is realised.
3
The conditions are that—
a
the land is acquired with the sole or main object of realising a gain from disposing of all or part of the land,
b
any property deriving its value from the land is acquired with the sole or main object of realising a gain from disposing of all or part of the land,
c
the land is held as trading stock, and
d
the land is developed with the sole or main object of realising a gain from disposing of all or part of the land when developed.
4
It does not matter for the purposes of this section whether the person within section 757(1)(a), (b) or (c) obtains the gain for that person or another person.
5
For the purposes of this section, if, for example by a premature sale, a person (“A”) directly or indirectly transmits the opportunity of realising a gain to another person (“B”), A obtains B's gain for B.
6
For the meaning of “another person”, see section 763.
757Person obtaining gain
1
The persons referred to in section 756(1)(d) are—
a
the person acquiring, holding or developing the land,
b
a person connected with a person within paragraph (a), and
c
a person who is a party to, or concerned in, an arrangement or scheme within subsection (2).
2
An arrangement or scheme is within this subsection if—
a
it is effected as respects all or part of the land, and
b
it enables a gain to be realised—
i
by any indirect method, or
ii
by any series of transactions.
3
For the purposes of this section any number of transactions may be regarded as constituting a single arrangement or scheme if—
a
a common purpose can be discerned in them, or
b
there is other sufficient evidence of a common purpose.
758Income charged
1
Tax is charged under this Chapter on the full amount of income treated as arising in the tax year.
2
See section 760 (method of calculating gain) for how to calculate the amount of income charged.
759Person liable
1
The person liable for any tax charged under this Chapter on income is the person whose income it is.
2
The general rule is that that person is the person who realises the gain.
3
But that rule is subject to subsections (4) and (6).
4
If all or any part of the gain accruing to a person (“A”) is derived from value provided directly or indirectly by another person (“B”), the income is B's.
5
Subsection (4) applies whether or not the value is put at the disposal of A.
6
If all or any part of the gain accruing to a person is derived from an opportunity of realising a gain provided directly or indirectly by another person, the income is the other person's.
7
For the meaning of “another person”, see section 763.
8
In applying section 1015 (territorial scope of charges including the charge under this Chapter) for the purposes of this Chapter, an amount treated as arising to a non-UK resident under section 756 is treated as being from a source in the United Kingdom so far (and only so far) as the land to which the disposal relates is in the United Kingdom.
760Method of calculating gain
1
Subsections (3) to (5) apply for calculating a gain for the purposes of this Chapter.
2
But, except so far as those subsections make provision, such method is to be used for those purposes as is just and reasonable in the circumstances.
3
The method must—
a
take into account the value of what is obtained for disposing of the land, and
b
allow only such expenses as are attributable to the land disposed of.
4
If a freehold is acquired and on disposal the reversion is retained, account may be taken of the way in which trading profits are calculated in such a case.
5
Account may be taken of the adjustments to be made in calculating trading profits under section 158 of ITTOIA 2005 (lease premiums etc: reduction of receipts).
6
In this section “trading profits” means the profits under Part 2 of ITTOIA 2005 (trading profits) of a person dealing in land.
7
In the application of this section in Scotland—
“freehold” means the interest of the owner, and
“reversion” means the interest of the landlord in property subject to a lease.
8
See also section 764 (valuations and apportionments).