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HMRC internal manual

Business Income Manual

Measuring the profits (particular trades): land: trading transactions: profit seeking motive

An intention to dispose of land at a profit at some time in the future, does not automatically mean there is an intention to trade (CIR v Reinhold [1953] 34TC389), though in appropriate circumstances such an intention can ensure that a transaction is an adventure in the nature of a trade.

Land may be acquired as a capital asset in the knowledge that it will appreciate in value and realise a ‘profit’ one day on disposal.

It is not conclusive that the land will produce investment income before eventual sale: Marson v Morton and Others [1986] 59TC381. Accordingly, it will be insufficient to demonstrate a profit seeking motive. A trading intention has to be shown from all the facts of the case.