Overages

[Nonimous]

Client sold inherited farmland in 2015 with a side agreement that if the buyer was able to get planning permission and implement it (which appears to mean starting work) then she would receive an additional payment.
The additional payment consists of a percentage of the value of the land when planning permission has been granted and it's ready to go, less the amount the buyer paid and their costs for getting planning permission.
I am inclined to think this is a capital gains tax charge because it does not seem to meet the criteria to be an income tax charge. It isn't a 'slice of the action' contract as she has no right to the buyer's post-development sale proceeds, only on the increase in value when planning permission is granted. Indeed She is 'out' long before the buyer starts trading and indeed, I think her additional payment does not arise *as a result of the development*, but because the development has become possible.
I shall probably advise her to apply for clearance, but wondered if anyone had any thoughts.

[AGoodman]

Sounds pretty clear cut CGT to me - there aren't any factors that would suggest an income tax treatment.

May not be much point in getting clearance after the fact.

[pawncob]

S.O.P in many developments.Always CGT.