Office of Public Sector Information
PART 13 continued CHAPTER 3 continued
(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.
(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.
(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.
(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).
(1) For the purposes of this Chapter, account is to be taken of any method, however indirect, by which—
(a) any property or right is transferred or transmitted, or
(b) the value of any property or right is enhanced or diminished.
(2) Accordingly—
(a) the occasion of the transfer or transmission of any property or right however indirect, and
(b) the occasion when the value of any property or right is enhanced,
may be an occasion when tax is charged under this Chapter.
(3) Subsections (1) and (2) apply in particular—
(a) to sales, contracts and other transactions made otherwise than for full consideration or for more than full consideration,
(b) to any method by which any property or right, or the control of any property or right, is transferred or transmitted by assigning—
(i) share capital or other rights in a company,
(ii) rights in a partnership, or
(iii) an interest in settled property,
(c) to the creation of an option affecting the disposition of any property or right and the giving of consideration for granting it,
(d) to the creation of a requirement for consent affecting such a disposition and the giving of consideration for granting it,
(e) to the creation of an embargo affecting such a disposition and the giving of consideration for releasing it, and
(f) to the disposal of any property or right on the winding up, dissolution or termination of a company, partnership or trust.
(1) This section applies if it is necessary to determine the extent to which the value of any property or right is derived from any other property or right for the purposes of this Chapter.
(2) Value may be traced through any number of companies, partnerships and trusts.
(3) The property held by a company, partnership or trust must be attributed to the shareholders, partners or beneficiaries at each stage in such manner as is appropriate in the circumstances.
(1) For the purposes of this Chapter references to other persons are to be read in accordance with subsections (2) to (4).
(2) A partnership or partners in a partnership may be regarded as a person or persons distinct from the individuals or other persons who are for the time being partners.
(3) The trustees of settled property may be regarded as persons distinct from the individuals or other persons who are for the time being the trustees.
(4) Personal representatives may be regarded as persons distinct from the individuals or other persons who are for the time being personal representatives.
(1) All such valuations are to be made as are appropriate to give effect to this Chapter.
(2) For the purposes of this Chapter, any expenditure, receipt, consideration or other amount may be apportioned by such method as is just and reasonable in the circumstances.
(1) This section applies if—
(a) income is treated as arising because the condition mentioned in section 756(3)(d) is met (land developed with sole or main object of realising a gain from its disposal when developed), and
(b) part of the income is fairly attributable to a period before the intention to develop was formed.
(2) No liability to income tax arises under this Chapter in respect of that part of the income.
(3) In applying this section account must be taken of the treatment under Part 2 of ITTOIA 2005 (trading profits) of a person who appropriates land as trading stock.
(1) No liability to income tax arises under this Chapter in respect of a gain on property deriving value from land if—
(a) the gain is obtained by the holder of shares,
(b) the gain arises as a result of the holder of shares falling within section 757(1)(a) or (b) (persons acquiring, holding or developing land and connected persons), and
(c) the circumstances are such as are mentioned in subsections (2) and (3).
(2) The gain arises on a disposal of shares in—
(a) a company which holds that land as trading stock, or
(b) a company which directly or indirectly owns at least 90% of the ordinary share capital of another company which itself holds that land as trading stock.
(3) All the land so held is disposed of—
(a) in the normal course of its trade by the company which holds it, and
(b) so as to procure that all opportunity of profit in respect of the land arises to that company.
(4) This section does not affect any liability as a result of any person falling within section 757(1)(c) (parties to arrangements and schemes, etc).
No liability to income tax arises under this Chapter in respect of a gain accruing to an individual if—
(a) the gain is exempt from capital gains tax as a result of sections 222 to 226 of TCGA 1992 (private residences), or
(b) it would be so exempt but for section 224(3) of that Act (residences acquired partly with a view to making a gain).
(1) This section applies if a person (“A”) is assessed to tax under this Chapter in respect of consideration receivable by another person (“B”).
(2) Consideration is not regarded as having become receivable by B for this purpose until B can effectively enjoy or dispose of it.
(3) A is entitled to recover from B any part of the tax which A has paid.
(4) If any part of the tax remains unpaid at the end of the period of 6 months beginning with the date when it became due and payable, it is recoverable from B as if B were the person assessed.
(5) Subsection (4) does not affect the right to recover the tax from A.
(6) For the purposes of this section, any income which an individual is treated as having as a result of this Chapter (the “land income”) is treated as the highest part of the individual’s total income.
(7) But if in the tax year—
(a) more than one gain is treated as the individual’s land income, or
(b) the individual is also treated as having income as a result of Chapter 4 (sales of occupation income),
only a just and reasonable proportion of each gain treated as land income is to be treated as the highest part of the individual’s total income.
(8) See section 1012 for the relationship between—
(a) the rules in subsections (6) and (7), and
(b) other rules requiring particular income to be treated as the highest part of a person’s total income.
(1) For the purposes of section 768(3), an officer of Revenue and Customs must, if required to do so, produce a certificate specifying—
(a) the amount of income in respect of which tax has been paid, and
(b) the amount of tax paid.
(2) The certificate is conclusive evidence of any facts stated in it.
(3) See also section 944 (under which directions may be given for payments within this Chapter to non-UK residents to be made under deduction of tax).
(1) This section applies if a person considers that the condition mentioned in section 756(3)(a), (b) or (d) may be met as respects a gain of a capital nature which that person—
(a) has obtained from the disposal of land, or
(b) would obtain from a proposed disposal of land.
(2) The person may provide the Commissioners for Her Majesty’s Revenue and Customs with written particulars showing how the gain has arisen or would arise.
(3) The Commissioners must notify the person whether or not they are satisfied that, in the circumstances described in the particulars, the person will not, or would not, be liable to tax on the gain under this Chapter.
(4) The notification must be given before the end of the period of 30 days beginning with the day after that on which the particulars are received.
(5) A person notified by the Commissioners under this section that they are so satisfied is not liable to income tax on the gain under this Chapter.
(6) A notification under this section about the Commissioners' decision concerning a gain is void if the particulars given under this section about the gain do not make a full and accurate disclosure of all facts and considerations relating to it which are material to the decision.
(1) An officer of Revenue and Customs may by notice require any person to provide the officer within such period as the officer may direct with such particulars as the officer may reasonably require for the purposes of this Chapter.
(2) That period must be at least 30 days.
(3) The particulars which a person must provide under this section, if required to do so by such a notice, include particulars about—
(a) transactions or arrangements with respect to which the person is or was acting on behalf of others,
(b) transactions or arrangements which in the opinion of the officer should properly be investigated for the purposes of this Chapter, although in the person’s opinion no liability to tax arises under this Chapter, and
(c) whether the person has taken or is taking any part and, if so, what part in transactions or arrangements of a description specified in the notice.
(4) Subsection (3) is subject to subsection (5).
(5) In relation to anything done by a solicitor on behalf of a client who does not consent to the provision of information required to be provided by a notice under subsection (1), the solicitor may not be compelled under this section to do more than—
(a) state that the solicitor was acting on behalf of a client, and
(b) give the name and address of the client.
(6) A solicitor is not treated as having taken part in a transaction or arrangement for the purposes of subsection (3)(c) merely because of giving professional advice to a client about it.
(1) In this Chapter “capital”, in relation to a gain, means that the gain does not fall to be included in any calculation of income for income tax purposes apart from this Chapter.
(2) In this Chapter references to property deriving its value from land include—
(a) any shareholding in a company deriving its value directly or indirectly from land,
(b) any partnership interest deriving its value directly or indirectly from land,
(c) any interest in settled property deriving its value directly or indirectly from land, and
(d) any option, consent or embargo affecting the disposition of land.
(3) In this Chapter—
“company” includes any body corporate, and
“share” includes stock.
(1) This Chapter imposes a charge to income tax—
(a) on individuals to whom income is treated as arising under section 778 (income arising where capital amount other than derivative property or right obtained), and
(b) on individuals to whom income is treated as arising under section 779 (income arising where derivative property or right obtained).
(2) Income is treated as arising under those sections only if—
(a) transactions are effected or arrangements made to exploit the earning capacity of an individual in an occupation, and
(b) the main object or one of the main objects of the transactions or arrangements is the avoidance or reduction of liability to income tax.
In this Chapter references to an occupation, in relation to an individual, are references to any activities of a kind undertaken in a profession or vocation, regardless of whether the individual—
(a) is carrying on a profession or vocation on the individual’s own account, or
(b) is an employee or office-holder.
This Chapter has effect subject to—
(a) Chapter 5 of Part 5 of ITTOIA 2005 (settlements: amounts treated as income of settlor), and
(b) any other provision of the Tax Acts treating income as belonging to a particular person.
(1) Income tax is charged on income treated as arising under—
(a) section 778 (income arising where capital amount other than derivative property or right obtained), or
(b) section 779 (income arising where derivative property or right obtained).
(2) Tax is charged under this section on the full amount of income treated as arising in the tax year.
(3) The person liable for any tax charged under this section is the individual to whom the income is treated as arising.
(4) This section is subject to section 784 (exemption for sales of going concerns).
(1) Sections 778 and 779 apply only if conditions A to C are met in respect of an individual.
(2) Condition A is that the individual carries on an occupation wholly or partly in the United Kingdom.
(3) Condition B is that transactions are effected or arrangements made to exploit the individual’s earning capacity in the occupation by putting another person (see section 782) in a position to enjoy—
(a) all or part of the income or receipts derived from the individual’s activities in the occupation, or
(b) anything derived directly or indirectly from such income or receipts.
(4) The reference in subsection (3) to income or receipts derived from the individual’s activities includes a reference to payments for any description of copyright or licence or franchise or other right deriving its value from the individual’s activities (including past activities).
(5) Condition C is that as part of, or in connection with, or in consequence of, the transactions or arrangements a capital amount is obtained by the individual for the individual or another person.
(6) For the purposes of subsection (5), the cases where an individual (“A”) obtains a capital amount for another person (“B”) include cases where A has put B in a position to receive the capital amount by providing B with something of value derived, directly or indirectly, from A’s activities in the occupation.
(7) In this Chapter “capital amount” means an amount in money or money’s worth which does not fall to be included in a calculation of income for income tax purposes apart from this Chapter.
(1) This section applies if the capital amount obtained as mentioned in section 777(5) does not consist of—
(a) property which derives substantially the whole of its value from the individual’s activities, or
(b) a right which does so.
(2) The capital amount is treated for income tax purposes as income arising to the individual.
(3) The income is treated as arising in the tax year in which the capital amount is receivable.
(4) A capital amount is not regarded as having become receivable by a person for the purposes of this section until the person can effectively enjoy or dispose of it.
(1) This section applies if—
(a) the capital amount obtained as mentioned in section 777(5) consists of—
(i) property which derives substantially the whole of its value from the activities of an individual, or
(ii) a right which does so, and
(b) the property or right is sold or otherwise realised.
(2) For the purposes of subsection (1), it does not matter whether the capital amount is obtained on one occasion or on two or more occasions (for example, because the individual acquires a stock option and subsequently exercises it).
(3) Income of an amount equal to the proceeds of sale or the realised value is treated for income tax purposes as income arising to the individual.
(4) The income is treated as arising in the tax year in which the property or right is sold or otherwise realised.
(1) For the purposes of this Chapter, account is to be taken of any method, however indirect, by which—
(a) any property or right is transferred or transmitted, or
(b) the value of any property or right is enhanced or diminished.
(2) Accordingly—
(a) the occasion of the transfer or transmission of any property or right however indirect, and
(b) the occasion when the value of any property or right is enhanced,
may be an occasion when tax is charged under this Chapter.
(3) Subsections (1) and (2) apply in particular—
(a) to sales, contracts and other transactions made otherwise than for full consideration or for more than full consideration,
(b) to any method by which any property or right, or the control of any property or right, is transferred or transmitted by assigning—
(i) share capital or other rights in a company,
(ii) rights in a partnership, or
(iii) an interest in settled property,
(c) to the creation of an option and the giving of consideration for granting it,
(d) to the creation of a requirement for consent and the giving of consideration for granting it,
(e) to the creation of an embargo affecting the disposition of any property or right and the giving of consideration for releasing it, and
(f) to the disposal of any property or right on the winding up, dissolution or termination of a company, partnership or trust.
(1) This section applies if it is necessary to determine the extent to which the value of any property or right is derived from any other property or right for the purposes of this Chapter.
(2) Value may be traced through any number of companies, partnerships and trusts.
(3) The property held by a company, partnership or trust must be attributed to the shareholders, partners or beneficiaries at each stage in such manner as is appropriate in the circumstances.
(1) For the purposes of this Chapter references to other persons are to be read in accordance with subsections (2) to (4).
(2) A partnership or partners in a partnership may be regarded as a person or persons distinct from the individuals or other persons who are for the time being partners.
(3) The trustees of settled property may be regarded as persons distinct from the individuals or other persons who are for the time being trustees.
(4) Personal representatives may be regarded as persons distinct from the individuals or other persons who are for the time being personal representatives.
(1) All such valuations are to be made as are appropriate to give effect to this Chapter.
(2) For the purposes of this Chapter, any expenditure, receipt, consideration or other amount may be apportioned by such method as is just and reasonable in the circumstances.
(1) This section applies if a capital amount is obtained from the disposal—
(a) of assets (including any goodwill) of a profession or vocation,
(b) of a share in a partnership which is carrying on a profession or vocation, or
(c) of shares in a company.
(2) An individual is not liable to income tax under this Chapter in respect of the capital amount so far as the going concern condition is met (see subsections (4) and (5)).
(3) Subsection (2) is subject to section 785 (restriction on exemption: sales of future earnings).
(4) In the case of a disposal within subsection (1)(a) or (b), the going concern condition is that the value of what is disposed of at the time of disposal is attributable to the value of the profession or vocation as a going concern.
(5) In the case of a disposal within subsection (1)(c), the going concern condition is that the value of what is disposed of at the time of disposal is attributable to the value of the company’s business as a going concern.
(6) In subsection (5) the reference to the company’s business includes a reference to the business of any other company in which it holds shares directly or indirectly.
(1) This section applies if the value as a going concern mentioned in section 784(4) or (5) is derived to a material extent from prospective income or receipts derived directly or indirectly from the individual’s activities in the occupation.
(2) The exemption under section 784 applies to the value so derived only if the future earnings condition is met.
(3) The future earnings condition is met if, ignoring all capital amounts, the individual will receive full consideration for the prospective income or receipts, whether as a partner in a partnership or as an employee or otherwise.
(4) The references in subsections (1) and (3) to income or receipts include references to payments for any description of copyright, licence, franchise or other right deriving its value from the individual’s activities (including past activities).
(1) This section applies if a person (“A”) is assessed to tax under this Chapter in respect of consideration receivable by another person (“B”).
Income Tax Act 2007