Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration

Readers' forum : Land collaboration

29 November 2016
Issue: 4578 / Categories: Forum & Feedback

Capital gains tax liability on agreement for landowners to pool their land.

My farming client is considering clubbing together with neighbouring landowners to make a site more attractive for residential development. An ‘equalisation’ agreement is being contemplated under which each disposing landowner will pay a share of the proceeds to the others based on the respective acreages contributed into the ‘pot’. The concern is that a double capital gains tax charge will result following the case of Burca v Parkinson.

In essence the ‘pay-aways’ are not deductible for the vendor under TCGA 1992 s 38 and the others have a capital gains tax liability on the crystallisation of a chose in action. This at least appears to be the strict position but is it a point that HMRC takes in practice?

Have any Taxation readers had experience of HMRC allowing a deduction for the ‘pay-aways’?

I am aware there are potential solutions to the problem (such as land pooling ...

If you or your firm subscribes to, please click the login box below:

If you are not a subscriber but are a registered user or have a free trial, please enter your details in the following boxes:

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this item in full.

Please reach out to customer services at +44 (0) 330 161 1234 or '' for further assistance.

back to top icon