BIM60375 - Land transactions: ICTA88/S776:
Exemptions: Profit chargeable Schedule D Case I
Provided certain conditions are satisfied, ICTA88/S776 (10)
exempts from Section 776 the gain on shares:
- in any company holding land as trading
stock, or
- in a company which owns, directly or
indirectly, at least 90% of the ordinary share capital of another
company which holds land as trading stock.
The conditions
The exclusion only operates if:
- all the land held by the company is
subsequently disposed of by that company in the normal course of
its trade, and
- it is disposed of in such a way that all
opportunity of profit in respect of the land arises to the
company.
However
, this exemption applies only where ICTA88/S776 (2)(i) applies
(see
BIM60330). Where there is an
'arrangement' or 'scheme', and we seek to proceed via subsection
2(ii), the exemption does not apply.
Forward Note
At the time of the disposal of the shares, the question of
whether ICTA88/S776 applies is dependent on the fate of the land
owned by the company. A forward note should therefore be made
to
- periodically check what has become of the
land, and
- determine whether a protective assessment
should be made as assessing time limits approach
In the event that an assessment is required, it is made on the
shareholder who has disposed of the shares.
