Who is liable for income tax on a gain from a transaction in land under section 759?

Under section 759 of the Income Tax Act 2007, the person who realises the gain from a land transaction is generally liable for the income tax charge. However, if the gain was derived from value or an opportunity provided by another person, liability shifts to that other person instead.

When does section 759 shift tax liability to someone who provided value?

Section 759 shifts liability when a gain accruing to one person is derived from value provided directly or indirectly by another person. It does not matter whether the value was placed at the recipient's disposal. The person who provided the value becomes liable for the income tax on the gain.

Can section 759 apply where someone provided an opportunity rather than financial value?

Yes. Section 759 applies where a gain is derived from an opportunity to realise that gain provided directly or indirectly by another person. For example, if someone uses professional contacts to arrange a profitable land acquisition for another party, the person who provided the opportunity bears the tax liability.

What is the purpose of the liability-shifting rules in section 759?

The liability-shifting rules prevent avoidance by routing land transaction gains through other parties. They allow HMRC to look beyond the person who physically received the gain and charge tax on whoever was the economic driver behind the transaction, whether they contributed money, assets, or the opportunity.

Income Tax Act 2007 section 759

Person liable

Section 759 identifies who is liable to pay the income tax charge that arises when a gain is made from a transaction in land.

The general rule is that the person who realises the gain from the land transaction is the person liable for the tax on it.
If the gain arose because another person provided value (whether directly or indirectly, and regardless of whether that value was placed at the disposal of the person realising the gain), the person who provided the value is liable instead.
Similarly, if the gain arose because another person provided the opportunity to realise the gain (directly or indirectly), that other person is liable for the tax.
These rules can shift the tax liability away from the person who actually received the gain and onto whoever funded or facilitated the transaction.

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