A developer / planning consultant can often approach landowners whose land has the potential for development and request they enter into a promotion agreement. In theory, this is a mutually beneficial arrangement. The developer / planning promoter will agree to promote the land on behalf of the landowner for development, to apply for and obtain planning permission at their own expense, and once obtained, to market the property and sell the same, in return for a share of the net proceeds of sale (typically between 18-25% of the proceeds of sale). The advantage to the landowner is that their land has been promoted and whilst parting with some equity from the net proceeds of sale, the land will have enjoyed a significant uplift in value. There are many key issues that need to be considered in relation to promotion agreements, not only from a Tax perspective, but in terms of the agreement itself. It is important that clear Heads of Terms are agreed from the outset. Important terms include: what are the objectives, what is the promotion period, in what circumstances may that be extended, what is the sales period, what expenses may be recouped by the developer / planning promotor, will there be a cap, will a best price / minimum price be secured / offered by the promoter? What is the promotor’s fee, will VAT be charged, what is the marketing strategy and how will all this be documented and secured? We have seen promotion agreements provided to our clients (without advice sought) for signature by a developer that are no more than 1-2 pages in length. They really ought to be 30-40 pages in length. These are technical documents and thorough consideration and professional advice is required.