Taylor v Good

CA 1974 49 TC 277 [1974] STC 148 [1974] 1 WLR 556 [1974] 1 ALL ER 1137

The taxpayer carried on two retail businesses and lived with his wife, who assisted him in his businesses, in a two-bedroom council flat over one of the shops. The taxpayer purchased at auction, a property with 17 rooms, and 9½ acres of land. At the time of purchase, the property was in a bad state of repair and at the taxpayer had made no decision on what to do with the property what to do with it but had in mind possibly going to live there. On inspecting the interior of the house his wife rejected that idea and the idea was abandoned. He subsequently applied for planning permission to develop the site by knocking-down the existing dwelling house and build 90 residential properties on the site. He received offers from several developers for the site and subsequently accepted one of the offers. The Inland Revenue issued an assessment to income tax on the grounds that this was a venture in the nature of trade.

The Court of Appeal allowed the taxpayer’s appeal, holding that, on the facts found or conceded, there was no evidence of an adventure in the nature of trade and should, instead taxed as a capital gain.