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HMRC internal manual

Capital Gains Manual

Roll-over relief: land and buildings: occupied as well as used

The words “occupied” and “used” are not defined in the Act. Therefore you will have to rely on the ordinary dictionary meaning, together with any judicial guidance on the terms occupied and used. To qualify for roll-over relief the land would have to be occupied as well as used only for the purposes of the claimant’s trade. In the case Temperley v Visibell (49 TC 124) Foster J specifically declined to give an interpretation of the words in what is now S155.

“I am not prepared to try to give any definition in regard to the words “used” and “occupied” within the ambit of Section 33. But whatever the words may mean and whatever meanings can be given to them within Section 33, I find it impossible to say that the mere visits to a site coupled with the intention to build and application for planning permission, can satisfy that section”.

So the purchase of land with the intention of building a qualifying asset, site visits and planning permission were held not to be sufficient to qualify. Where land is acquired with the intention of erecting a building for use in the owner’s trade but the plans do not come to fruition and the land (as a bare site or partially or fully developed) is sold or let without having been occupied and used for the purposes of the claimant’s trade, it should not be regarded as a qualifying asset.


In the case of Newcastle City Council v Royal Newcastle Hospital [1959] AC248 Lord Denning set out the criteria which may be used to ascertain whether land is deemed to be occupied. The same test can be applied to buildings.

“Legal possession is not the same as occupation. Occupation is a matter of fact and only exists where there is sufficient measure of control to prevent strangers from interfering. There must be something actually done on the land, not necessarily on the whole but on part in respect of the whole. No-one would describe a bombed site or an empty unlocked house as “occupied” by anyone; but everyone would say that a farmer “occupies” the whole of his farm even though he does not set foot on the woodlands within it from one year’s end to the other”.


In the same case the Courts were asked to decide whether land which had been obtained by the hospital in order to preserve the serenity of its surroundings was in fact used by the hospital. It was held that an owner of land could establish use where he simply kept the land in a virgin state for his own special purposes.

“An owner can use land by keeping it in its virgin state for his own special purposes. An owner of a powder magazine or a rifle range uses the land he has acquired nearby for the purposes of ensuring safety even though he never sets foot on it. The owner of an island uses it for the purposes of as bird sanctuary even though he does nothing on it, except prevent people building there or disturbing the birds.”

It is clear that ownership of an asset is not enough to satisfy these tests. There must be actual use by the claimant for the purposes of their trade and they will have to show that they retain control by virtue of occupation of the land or buildings. The tests are ultimately a question of fact.