Finance Act 2022

36 Residential property development activities: “interest in land”

(1) A company has an interest in land for the purposes of this Part if—

(a) the company or a related company has—

(i) an estate, interest, right or power in or over the land, or

(ii) the benefit of an obligation, restriction or condition affecting the value of an estate, interest, right or power in or over the land,

other than an excluded interest, and

(b) that estate, interest, right or power forms part of the company’s, or the related company’s, trading stock of a trade which includes the carrying on of activities for the purposes of, or in connection with, the development of residential property.

(2) The following interests are “excluded interests”—

(a) any interest or right held for securing the payment of money or the performance of any other obligation, and

(b) a licence to use or occupy land.

(3) But where a company (C) has an interest within subsection (2)(b), that interest is not an excluded interest if it is granted as a result of arrangements to which C or a related company is party and under which an estate in the land in question is to be conveyed by another party to the arrangements at the direction or request of C or a related company to any of—

(a) a person who is not party to the arrangements,

(b) C, or

(c) a company related to C.

(4) For the purposes of subsection (3)—

(a) “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable);

(b) a conveyance by a person as nominee or bare trustee is to be treated as also being a conveyance by the person or persons for whom they are the nominee or trustee.

(5) For the purposes of this section, a company (A) is related to another company (B) if—

(a) A is a member of a group of which B is a member;

(b) A is a relevant joint venture company and B, or B together with any other company which is a member of a group of which B is a member, has or have a substantial interest in A.

(6) In this section “trading stock”, in relation to a trade, means an estate, interest, right or power in or over land—

(a) which is disposed of in the ordinary course of the trade, or

(b) which would be so disposed of on the completion of activities that are carried on for the purposes of, or in connection with, the development of residential property.

(7) For the purposes of subsection (6), a licence falling within subsection (3) to use or occupy land is to be treated as being disposed of when an estate in the land is, or would be, conveyed under the arrangements as a result of which the licence is granted.

(8) In this section, references to a disposal have the same meaning as in TCGA 1992 (see section 21 of that Act (assets and disposals)).

(9) If a relevant joint venture company is related to a company and is a member of a group, the relevant joint venture company is treated for the purposes of this section—

(a) as having any asset which any other member of the group has, and

(b) as if anything done by or in relation to any other member of the group were done by or in relation to it.