'Slice of the action' contracts are so called because they
confer upon a landowner (who holds the land as an investment) the
right to share in the proceeds of any subsequent development by the
purchaser. In these cases the contract for sale of the land to a
builder or developer provides for consideration that is, in whole
or in part, contingent upon the successful development of the land.
A common arrangement is for the landowner to receive a fixed sum at the time of the disposal, plus a percentage of the sale proceeds of each building subsequently constructed by the purchaser on the land.
Such 'slice of the action' contracts fall within ICTA88/S776. The activity carried on by the purchaser, who acquires, develops and sells the land, is a trading activity. The vendor, in entering into the slice of the action contract, is able to share in the proceeds of that trading activity. However he cannot be assessed under Schedule D Case I because the vendor is not a builder, the contingent consideration is a capital receipt on the disposal of a capital asset. This constitutes the avoidance, which may be unwitting, that ICTA88/S776 targets.
We accept that the fixed initial payment is not caught by ICTA88/S776 (2)(c), since it is not contingent upon the development. We argue that the contingent part is within ICTA88/S776 and Page v Lowther  57TC199 provides the authority for applying Section 776 in these circumstances.
An element of the contingent payment may not arise as result of the development and therefore remains within the charge to capital gains tax (see BIM60360).