BIM60595 - Profits from a trade of dealing in or developing UK land: Profit already brought into account
To the extent that profits or gains from a land disposal would be brought into account as trading income by other sections of UK legislation they will not be taxed again by Part 8ZB CTA 2010 or Part 9A ITA 2007 (Section 356C (3) CTA 2010, Section 356OE (3) CTA 2010, Section 517C (3) ITA 2007 and Section 517E (3) ITA 2007).
»Ê¹ÚÌåÓýappse sections seek to prevent double UK taxation. »Ê¹ÚÌåÓýapp provisions mean the legislation will not include profits that are already taxable as income within the UK.
Where shares in a trading company are disposed of and all of the land is held as trading stock there will be no charge as profits from disposal of the land will be chargeable on the company in the absence of avoidance arrangements.
Where the fragmented activities provisions apply, if a relevant contribution is made by an associated party and the profit would already be fully brought into account as income in calculating profits for UK corporation tax or income tax purposes, the new rules should not apply, and there will be no need to adjust taxable profits of those involved in the property transaction, as there will be no extra profit to assess.
Example
Mr A holds the shares in a family land development business. »Ê¹ÚÌåÓýapp company holds the land as a trading asset. »Ê¹ÚÌåÓýappre are no avoidance arrangements. »Ê¹ÚÌåÓýapp company pays the tax on the profit from disposing of the land so the profits are not included in any computation of charge in respect of any profits from disposal of the shares held by Mr A.