Finance (Miscellaneous Provisions) Act, 1968

Postponement of payment of tax to be permitted in certain cases.

23.—(1) Where—

(a) a person (hereafter in this section referred to as the vendor) carrying on a trade of dealing in or developing land (hereafter in this section referred to as the trade) disposes, in the course of the trade, of the full interest acquired by him in any land,

(b) the person to whom the disposition is made (hereafter in this section referred to as the purchaser) is not a person connected with the vendor,

(c) the terms subject to which the disposition is made provide for the grant of a lease of the land by the purchaser to the vendor,

(d) a sum representing the value of the vendor's right to be granted a lease falls to be taken into account as a consideration for the disposal in computing the profits or gains of the trade, and

(e) within six months after the time of the disposition, a lease of the land in accordance with the said terms is granted by the purchaser to the vendor,

the following provisions of this section shall have effect in relation to tax for a year of assessment in the basis period for which the disposition is made.

(2) If, at the time when any amount of income tax charged by an assessment in respect of the profits or gains of the trade would, but for this subsection, become due and payable (otherwise than by virtue of section 418 or 419 of the Income Tax Act, 1967 ),—

(a) the vendor retains the leasehold interest acquired by him from the purchaser, and

(b) has not disposed, as regards the whole or any part of the land of an interest derived from that leasehold interest,

a part of the said amount of income tax equal to nine-tenths of so much thereof as would not have been chargeable if no sum had fallen to be taken into account as mentioned in subsection (1) (d) shall be payable in nine equal instalments at yearly intervals the first of which is payable on the 1st day of January in the year following that in which, but for this subsection, the said amount of income tax would have been payable.

(3) Where, in a case in which the postponement of payment of any amount of income tax has been authorised by subsection (2),—

(a) the vendor ceases to retain the leasehold interest acquired by him from the purchaser,

(b) the vendor disposes, as regards the whole or any part of the land, of an interest derived from the said leasehold interest,

(c) the vendor, being an individual, dies, or

(d) the vendor, being a company, commences to be wound up,

that said amount of income tax, or, as the case may be, so much of it as has not already become due and payable, shall become due and payable forthwith.

(4) In relation to any assessment to sur-tax made on the vendor, subsections (2) and (3) shall apply to so much of the tax charged thereby as would not have been chargeable if no sum had fallen to be taken into account as mentioned in subsection (1) (d) as they apply to so much of the income tax charged by an assessment in respect of the profits or gains of the trade as would not have been chargeable in that circumstance.

(5) In this section “basis period” means, in relation to any year of assessment, the period on the profits or gains of which income tax for that year is finally computed under Case I of Schedule D in respect of the trade or, where, by virtue of any provision of the Income Tax Acts, the profits or gains of any other period are taken to be the profits or gains of the said period, that other period.