Property held as an investment or for trade?

In 1993 the taxpayer bought a residential property which was occupied from time to time by people permitted to do so by its directors. However from 2008 use of the building declined so the company decided to sell it. After failing to find a buyer the company redeveloped the property to increase its attraction and achieve a higher return.

In its annual tax on enveloped dwellings returns the company claimed relief on the basis that the renovation work amounted to the start of a property development trade (FA 2013 s 138). HMRC refused the claim saying the taxpayer had not bought the property for development purposes. After the First-tier Tribunal dismissed its appeal the taxpayer appealed to the Upper Tribunal.

The judges in the Upper Tribunal said the First-tier Tribunal was correct to ask whether despite the fact that the property had not...