Private residence relief: purpose of realising gain: trading
If an argument can be sustained that an individual has acquired a dwelling house wholly or partly for the purpose of realising a gain from its disposal, then a charge to tax on trading income will take priority over an assessment to Capital Gains Tax. So it is rare for the first part of TCGA92/S224 (3) to be applied.
Nevertheless, as CG65214 explains, you can use the subsection as an alternative to a charge to tax on trading income in appropriate cases.
If this part of the subsection applies then the whole of the gain arising from the disposal of the dwelling house, together with any garden or grounds, will be excluded from private residence relief.