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HMRC internal manual

Business Income Manual

Measuring the profits (particular trades): land: trading transactions: useful land cases

The following is a list of useful land cases and the points of interest they illustrate. The list is not exhaustive. There are numerous decided cases and it is rarely profitable to spend time trying to find one which matches the facts of your case. It is much better to concentrate on the main principles, which can be extracted from the cases listed here.

Marson v Morton and Others [1986] 59TC381:

  • summary of badges of trading in land context
  • the role of case law in arguing and presenting cases
  • sale arranged prior to acquisition: a major trade pointer
  • trading is a question of fact

Lionel Simmons Properties Ltd (in Liquidation) and Others v CIR [1980] 53TC461:

  • the importance of establishing intention on acquisition
  • assets cannot be acquired with indeterminate status
  • assets can change from investment to trading stock and vice versa
  • judicial endorsement of concept of supervening trading

Iswera v CIR [1965] 1WLR 1985 (copies available from CTISA):

  • land bought partly for sale, partly for retention the former to finance the latter: transaction held to be trading
  • equivocal/non equivocal transactions

Kirkham v Williams [1991] 64TC253:

  • discussion of equivocal transactions
  • discussion of dual motive transactions

Harvey v Caulcott [1952] 33TC159:

  • the special position of builders in land transactions

The Hudson’s Bay Company v Stevens [1909] 5TC421:

  • the enhancement of land limited to development of the infrastructure does not entail trading

CIR v Reinhold [1953] 34TC389:

  • whether adventure in the course of trade
  • profit motive not conclusive of trading

Taylor v Good [1974] 49TC277, Page v Lowther [1983] 57TC199:

  • supervening trading