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HMRC internal manual

Property Income Manual

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HM Revenue & Customs
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Other sums treated like premiums: Mineral-bearing land: “Treasury Arrangement”

The owner of mineral bearing land might have a genuine commercial reason for selling it with a right to re-purchase once the minerals had been removed. This page is about how a similar result might be achieved without incurring an unintended charge under ICTA88/S36 or ITTOIA05/S284.

During the debate on the 1963 Finance Bill (Hansard 26 June 1963, column 1472) the Minister dealt with the case of a landowner who sold mineral bearing land on terms entitling him to repurchase after the minerals had been removed, thereby incurring a charge under ICTA88/S36 or ITTOIA05/S284 (see PIM1224), which was not intended. In the following statement he suggested an alternative arrangement (the so-called “Treasury Arrangement”) under which a lump sum received is to be charged (now) to CGT.

“In the case where there is a genuine commercial reason for a restricted sale of the type caught by FA63/S24 (now ICTA88/S36 or ITTOIA05/S284), there appears to be an alternative way of achieving much the same result. A landowner could enter into an arrangement under which he granted a lease of the surface for a small rent together with a licence in consideration of a lump sum to remove the minerals. The landowner would be chargeable on the rent but not, except in the unlikely event of the case falling within the charge under Case VII on short-term gains, on the lump sum”.

See CA50330 onwards where a person incurs capital expenditure on a mineral asset which is, or includes, an interest in land and mineral extraction allowances are claimed.