Thank you - that is what I thought but it is good to have a second opinion. Just for further clarification:
Does it make no difference if the proceeds from the house sale is used for her mother's care fees?
No valuation was done on the house in 2007 - would she need to get a professional valuation on this?
I'm afraid that the fact that the monies raised from the sale of the house are being used to pay care fees has no effect on the tax situation.Your friend will need to try to get a professional valuation of the house in 2007 so that any gain can be calculated. The tax office may ask the District Valuer to check the valuation used.