In 2011 clients bought a plot of land of just under an acre with planning permission to build one house on it. The intention was always to live in this house as the sole residence for the longer term.
The clients sold their previous house to finance the purchase of the land and moved into rented accommodation very close to the building plot.
They then found that they couldn't get a mortgage to build the house as originally planned, so went back to the drawing board, applied and got planning permission to build two houses, one on a plot covering 2/3rd of the land and the other on 1/3rd of the land.
They got the planning permission for this and the mortgage to build one smaller house, built it and moved in December 2014. This was on the 1/3rd of the land plot.
No footings or anything were put in on the second house and the second plot wasn't fenced off, it was just rough lawn along with the rest of the grounds. Services are to the plot though, as they were put in for the existing house and the planned house at the same time.
During 2015 they lived in the house, used all the land and their children played on all the land as garden.
Early 2016 they sold the second plot as land with planning permission and at that stage it was fenced off.
Do you agree (or disagree) that it is perfectly reasonable to treat this as a sale of part of the garden of a house with under 5000 square metres of grounds and not subject to Capital Gains Tax?
I add that the clients' business is not building or construction related.
If you agree that it is a sale of part of the private residence, is it prudent to put a note to the Tax Returns explaining the sale and treatment, or does that just indicate some doubt?!