Occupation is not temporary

The taxpayers a married couple bought 95 Rowan Avenue from their son in 2000.

In 2002 they bought 7 Woodland Drive. It required a lot of renovation that was started while the couple – the parents of the taxpayer in D Regan (TC2247) – were still at 95 Rowan Avenue which they agreed to sell to a developer in February 2003.

At the same time they purchased the adjacent house 93 Rowan Avenue to which they carried out improvements before moving in June 2003.

The couple left the house in April 2004 when they moved to 7 Woodland Drive. They subsequently added an extension to 93 Rowan Drive and sold it in August 2006.

HMRC said the disposal of 93 Rowan Avenue was a trading transaction and the proceeds were subject to income tax. Alternatively it was...