BIM60305 - Land transactions: ICTA88/S776: Overview

ICTA88/S776 is anti-avoidance legislation.

It primarily targets the avoidance of Case I tax involving land transactions that are, in essence, trading transactions, but where the 'profit' emerges in a capital or non-taxable form.

The Section also applies to:

• transactions where land is traded indirectly, for example via share sales (see BIM60455), and
• commercially motivated transactions where there may be no deliberate avoidance motive (see BIM60315).

ICTA88/S776 is not an alternative to Schedule D Case I in straightforward transactions involving the purchase and sale of land that fall short of constituting a trade, or an adventure in the nature of trade (see BIM60320).

There are exemptions for disposals of private residences and shares in land dealing companies when certain conditions are satisfied (see BIM60370 onwards).

There is a formal clearance procedure available for taxpayers who think that it may apply to a proposed transaction (see BIM60395 onwards).

Where ICTA88/S776 applies, the capital nature of the gain is not changed. The gain is however assessed on a receipts basis under Schedule D Case VI (see BIM60385).