In a 'slice of the action' contract ICTA88/S776 (2)(c) is
normally relevant.
Where this subsection is in point there is a restriction on
the overall gain that can be charged to Income Tax under
ICTA88/776. This restriction is at ICTA88/776 (7). ICTA88/776 (7)
takes out of the charge to Income Tax so much of the gain as is
attributable to the period
before the intention to develop the land was
formed.
Any gain which has accrued whilst the land functioned as a
capital asset will not therefore come within ICTA88/776. ICTA88/776
(7) ensures that the Income Tax charge will operate only on the
gain arising after the intention to develop has been formed (see
example at
BIM60365).
The 'first intention date' is a question of fact, which
should, if possible, be agreed with the other side at an early
stage in the enquiries. When it has been established you should
obtain a valuation of the land from the District Valuer at that
date.
CG72856 deals with the assessment to Capital Gains Tax of the
gain attributable to the period before the intention to develop the
land was formed.
