Finance Act 1977

55Development land tax

Part III of Schedule 2 to the [1976 c. 24.] Development Land Tax Act 1976 (realised development value: provisions applicable to leases etc.) shall have effect, and be deemed always to have had effect, with the insertion, after paragraph 13, of the following paragraph:—

“13A(1)The provisions of this paragraph shall have effect where there is a part disposal consisting of the grant of a lease and the terms on which the lease is granted are such that—

(a)the landlord enters into an obligation to bear the whole or part of the cost of certain works to be carried out after the date of the part disposal; and

(b)the amount of the consideration for the lease is greater than it would have been if the landlord had not entered into that obligation.

(2)For the purpose only of determining the amount of the expenditure on improvements or, as the case may be, on relevant improvements to be taken into account in determining the relevant base value of the interest disposed of on the part disposal referred to in sub-paragraph (1) above,—

(a)the works referred to in paragraph (a) of that sub paragraph shall be deemed to have been carried out immediately before the disposal; and

(b)in the carrying out of those works the landlord shall be deemed to have incurred expenditure equal, subject to sub-paragraph (6) below, to the amount of expenditure for which he will become liable in complying with the obligation referred to in sub-paragraph (1)(a) above.

(3)If, in a case where this paragraph applies,—

(a)the realised development value accruing to the chargeable person on the part disposal exceeds

(b)the amount of realised development value which would have accrued to him if, instead of making the part disposal, he had disposed of his interest in the land in which the lease concerned subsists for a consideration equal to its market value on the date of the part disposal,

development land tax shall not be chargeable on the amount of the excess.

(4)Sub-paragraph (5) below shall apply if, in determining the relevant base value of the interest disposed of by the part disposal referred to in sub-paragraph (1) above,—

(a)expenditure on relevant improvements is included in the aggregate amount which constitutes base A of that interest, and

(b)the amount which, before the making of any reduction under paragraph 10 above, constitutes expenditure on relevant improvements consists of or includes an amount of expenditure which is deemed to have been incurred by virtue of subparagraph (2)(b) above, and

(c)section 6 of this Act applies.

(5)In a case falling within sub-paragraph (4) above, for the purpose only of determining the amount of the further addition (if any) which, by virtue of section 5(1)(a)(v) of this Act, falls to be included in the aggregate amount referred to in paragraph (a) of that sub-paragraph, the amount which, before the making of any reduction under paragraph 10 above, is the amount of expenditure on relevant improvements shall be reduced by deducting therefrom so much of that amount as consists of expenditure deemed to have been incurred by virtue of sub-paragraph (2)(b) above.

(6)If the terms of the obligation referred to in subparagraph (1)(a) above do not quantify the amount of expenditure for which the landlord will become liable in complying with the obligation,—

(a)the amount of expenditure which the landlord is deemed to have incurred by virtue of subparagraph (2)(b) above shall, in the first instance, be the amount for which the Board estimate that he might reasonably be expected to become liable in compliance with the obligation; and

(b)if it subsequently appears to the Board that the amount of expenditure actually incurred by the landlord in complying with the obligation differs from the amount estimated under paragraph (a) above, such adjustment, whether by way of an assessment or the discharge or repayment of tax or otherwise, shall be made as may be required in consequence.”