B5.211 Assessment of profits or gains of land dealing
For the latest New Development, see ND.1943.
For the statutory provisions relating to offshore property developers and their UK profits arising from a trade which involves either dealing in or developing UK land, see B5.255. The provisions in this article relate to case law and HMRC Guidance.
It is well established that a person who has bought and sold land can be assessed to tax on income on any surplus if it can be shown that he was carrying on a trade1 of dealing in land. It follows that any assessment must be on trading income and that there can be no assessment on miscellaneous income. However, rents in respect of land in the UK which forms part of a dealer's trading stock is chargeable as property income2. A surplus may, alternatively, be assessable as a chargeable gain (see Division C2.11), or under the anti-avoidance provisions relating to artificial transactions in land3.
The problem of distinguishing between capital and revenue transactions is invariably more difficult in relation to land, because, perhaps more so than most other assets, it can constitute either an investment or trading stock. If a landowner, finding his property appreciating in value, sells part of it and uses the money to