Transactions in land

Transactions in land

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Company sold land for say £5m, Assuming that transactions in land applies, the value pre-intention value was say £2m so my understanding of the basic mechanics of TIL is that the £2m remains chargeable to capital and the £3m taxed as income. So far so good.

The issue is that the company re-invested £2.5m in an asset qualifying for rollover relief. The question is - what is the consideration for the disposal of the old asset? If it is, as a question of fact, £5m then rollover relief will be restricted. But if there is a provision that deems the consideration to be the consideration brought in for the purposes of computing the capital element of the gain we have unrestricted relief. But the TIL provisions refer only to apportionment of the gain - they don't refer to the consideration being treated in a particular way. Equally, s152 simply refers to the consideration received for the disposal of the old asset. That consideration is what it is, regardless of how the gain may be treated under TIL.

Thoughts?

Replies (2)

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By Steve Kesby
28th May 2015 10:33

Does...

... TCGA 1992, s 37 help at all?

Thanks (1)
By Ruddles
28th May 2015 10:43

That does indeed, Steve

I wasn't sure about the reference to the Income Tax Acts (no mention of CT) but HMRC's guidance seems to make it clear that it applies to income charged both to IT and CT.

Many thanks again for a quick and helpful answer.

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