The appellants’ chargeable gain on the disposal of their principal private residence was reduced due to a larger ‘permitted area’, but a part of the gain also arose due to ownership seven years before occupation.

The appellants (husband and wife) bought land for £11,000 in July 1987. At that time, the only buildings on the land were a large shed (which the husband used for storage, etc.) and a small ‘potting’ building. The total area of the site was between 0.65 and 0.70 hectares. The construction of a house commenced in 1992 and the appellants first occupied it in January 1995. In June 2006, property developers offered £2 million for the whole of the land. The appellants accepted and the transaction was completed in January 2007.

The appellants operated a takeaway in partnership. In May 2010, HM Revenue