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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Measuring the profits (particular trades): land: trading transactions: badges of trade

You should consider the established badges of trading and in particular the following:

  • whether there have been any previous transactions and, if so, at what intervals;
  • whether the way in which the transaction was organised was typical of a land dealer;
  • whether a loan was necessary to fund the purchase and, if so, on what terms;
  • the character of the land: was it amenity land for the purchaser, suitable for long term investment or ripe for immediate development?
  • the length of time the land was held and, particularly, whether there might have been, at the moment of acquisition, a pre-arranged sale.

The badges are summarised in the property dealing context in Marson v Morton and Others [1986] 59TC381. You should remember that no one factor is determinant. What you are seeking to establish is the overall ‘character’ of the transaction.