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The distinction between trading in land and treating land as a capital asset is not clear cut and has been tested in the courts many times. The following is a summary of cases where the taxpayers were found to be investors as well as trading in land – these cases relate to individuals, for companies and partnerships see B5.218B. For cases where trading in land has not been found see B5.217.

In Harvey¹, the appellant, a builder, built a number of shops on a site of which he was the leaseholder. He sublet two shops to his wife as his nominee, and they were transferred from his business accounts to his private accounts. The shops were later sold. He had also bought a house for his foreman to live in, which was similarly sold. He was assessed under former Schedule D Case I (trading income) in respect of all these transactions. The General Commissioners dismissed his appeal, but their decision was reversed in the High Court. Donovan J stated:

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