Ripe for redevelopment
- The underlying principle is the fair compensation of the property owner.
- TCGA 1992, s 246 makes special provision for a compulsory purchase.
- When calculating tax, an award is apportioned between its constituent elements.
- TCGA 1992, s 247 provides roll-over relief on terms significantly more generous than for the replacement of business assets.
- Case law relevant to the extent that tax should be taken into account when assessing compensation.
- Facts must be established before reasonable projections can be made about the tax liability.
The usual rationale for compulsory purchase is that public benefits are unlocked through the loss of private land. It’s axiomatic that a dispossessed proprietor is compensated fairly. Compensation should result in equivalence, placing the owner – so far as money can – in the position they would have been in had the land not been taken from them. Tax is sometimes overlooked in assessing that compensation, but it can be a material issue.
The compulsory purchase is a disposal at a time and on terms not of the owner’s choosing. Accordingly, TCGA 1992, s 246 makes special provision for such circumstances. In the first place, unless there’s a contract, the disposal takes place when the compensation is agreed or determined, recognising that disputes about entitlement are commonplace and may not be resolved until years after possession and title have been lost.
Broadly, compensation in this area includes sums relating to the value of the land acquired, any ...