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HMRC internal manual

Business Income Manual

From
HM Revenue & Customs
Updated
, see all updates

Measuring the profits (particular trades): land: trading transactions: introduction

Land is capable of being either a investment or trading stock. Accordingly, the problem of distinguishing between capital and revenue transactions is more difficult and has greater consequence.

The question of whether a transaction of purchase and sale of land is a trade, or the acquisition and disposal of a capital asset often arises.

Two common situations are:

  • where there is no existing land dealing or building trade and it is claimed that the transaction is therefore a capital transaction,
  • where there is an existing land dealing or building trade and it is claimed that the transaction is outside that trade.

BIM20050 onwards sets out the basic principles to be applied and BIM60005 - BIM60165 addresses these particular problems.