Corporation Tax Act 2010

Charge to tax on gains from transactions in land

818 Charge to tax on gains from transactions in land

(1) The charge to corporation tax on income applies to a gain to which section 819 (gains obtained from land disposals in some circumstances) applies.

(2) The charge applies for the accounting period of the company chargeable in which the gain is realised.

(3) As to which company that is, see section 821.

(4) For exemptions from the charge, see—

• section 827 (gain attributable to period before intention to develop formed), and

• section 828 (disposals of shares in companies holding land as trading stock).

819 Gains obtained from land disposals in some circumstances

(1) This section applies to a gain if—

(a) any of the conditions specified in subsection (2) is met as respects land,

(b) the gain is a gain of a capital nature 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 820(1)(a), (b) or (c) obtains the gain.

(2) 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.

(3) It does not matter for the purposes of this section whether the person within section 820(1)(a), (b) or (c) obtains the gain for that person or another person.

(4) 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.

(5) For the meaning of “another person”, see section 825.

820 Person obtaining gain

(1) The persons referred to in section 819(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.

821 Company chargeable

(1) The general rule is that the company chargeable to tax as a result of this Part is the company that realises the gain.

(2) But that rule is subject to subsections (3) and (5).

(3) 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”) which is a company, B is chargeable.

(4) Subsection (3) applies whether or not the value is put at the disposal of A.

(5) If all or any part of the gain accruing to a person (“C”) is derived from an opportunity of realising a gain provided directly or indirectly by another person (“D”) which is a company, D is chargeable.

(6) For the meaning of “another person”, see section 825.

822 Method of calculating gain

(1) Subsections (3) to (5) apply for calculating a gain for the purposes of this Part.

(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 136 of CTA 2009 (lease premiums etc: reduction of receipts).

(6) In this section “trading profits” means the profits under Part 3 of CTA 2009 (trading income) of a company 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 826 (valuations and apportionments).