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HMRC internal manual

Business Income Manual

Private Finance Initiative (PFI): contribution of land: investment or trading stock

It is a question of fact whether land contributed, as part of a barter arrangement, is acquired as trading stock or as an investment for tax purposes. A PFI operator is not, generally, dealing in land on trading account and, in such circumstances, the land is acquired as an investment for tax purposes. As Lord Wilberforce noted, in the case of CIR v Lionel Simmons Properties Ltd (in liquidation) & Others [1980] 53TC461, at pages 491-492:

‘What I think is not possible is for an asset to be both trading stock and permanent investment at the same time, nor to possess an indeterminate status - neither trading stock nor permanent asset. It must be one or the other…’