Taxes Consolidation Act 1997 section 640

Extension of charge under Case I of Schedule D to certain profits from dealing in or developing land

Section 640 ensures that profits from dealing in or developing land are taxed as trading profits under Case I of Schedule D, even where the person carrying on the business did not dispose of the full interest in the land.

• A disposal of part of an interest in land (such as granting a lease) is treated as a dealing in land, and a person who has development carried out by others is treated as developing land.
• Where a business of dealing in or developing land would constitute a trade if every disposal were treated as a sale of the full interest acquired in the course of the business, the business is deemed to be a trade and its profits are charged under Case I of Schedule D.
• The section targets activities that would not otherwise be regarded as trading because the person retained an interest in the land or did not originally acquire the land for development purposes.
• Where interests in land are disposed of during the winding up of a company, the company is treated as continuing to carry on its trade or business until all such disposals are completed, and the winding up is disregarded.