Transactions in UK land

By Tolley

The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Transactions in UK land
  • Introduction to the new regime
  • Non-resident companies dealing in or developing UK land
  • Arrangements for avoiding tax
  • Disposals of UK land on or after 8 March 2017
  • Fragmented activities
  • Exemptions
  • Anti-avoidance
  • When does HMRC seek to apply this anti-avoidance?
  • Clearances
  • Interaction with chargeable gainsNotification, assessment and payment
  • Introduction to rules applying to disposals before 8 March 2017
  • Conditions
  • Calculating the taxable amount
  • When does HMRC seek to apply this anti-avoidance?
  • Clearances
  • Interaction with chargeable gains

The new rules on taxing the profits of dealing in and developing UK land are mainly designed to ensure UK non-residents as well as UK residents are within the scope of UK tax on these profits. These rules repeal the previous legislation on transactions in land and replace them with a new regime. The new rules are widely drafted and will catch all persons undertaking transactions in UK land and property, whether resident in the UK or resident outside the UK. When originally enacted, the new rules applied to profits arising from contracts entered into from 5 July 2016. However, the commencement provisions have been amended by F(No 2)A 2017, s 39 such that all profits recognised in the accounts on or after 8 March 2017 are taxed, regardless of the date the contract was entered into.

FA 2016, ss 76–77, 81; CTA 2010, ss 356OA–356OT

This guidance note firstly discusses the new rules as they apply for corporation tax purposes and, secondly, the previous rules which applied prior to 8 March 2017.

Separate rules apply for income tax which are not discussed further in this guidance note, although the key provisions are similar. For personal tax rules, see the Transactions in land guidance note (subscription sensitive).

FA 2016, ss 78–79, 82

Given the wide drafting of the new provisions, it was not clear at first how investment activities would be targeted. However, HMRC has provided some guidance on this and has confirmed that it is not the purpose of the rules to alter the treatment of the activity if it is clearly investment. Transactions such as buying or repairing a property to generate rental income and to enjoy capital appreciation are not likely to be treated as trading activity under the transactions in UK land provisions. Some of these concerns are discussed in ‘Finance Bill 2016 changes to treatment of offshore

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