Goodier Smith and Watts

Devonshire House
Manor Way, Borehamwood
Hertfordshire, WD6 1QQ

Search News


The meaning of trade for tax purposes

Source: HM Revenue & Customs | | 09/04/2019

Interestingly, there is no statutory definition of ‘trade’. The only statutory reference to the term states that ‘trade’ includes a ‘venture in the nature of trade’. This absence of statutory clarity has left definition - is a certain activity a trade or not - to the courts, and they have set some established guidance. 

This effectively suggests that the term ‘trade’ can be taken to refer to operations of a commercial kind, by which the trader provides to customers for reward with some kind of goods or services. 

The courts have also found the so-called ‘badges of trade’ tests to be helpful indicators of trading in some cases. The tests, whilst not conclusive, are used to help determine whether an activity is an economic / business activity or merely a money-making side line to a hobby. 

It is clear from the significant amount of case law on this subject that a decision on whether there is indeed a trade is often not black and white. Even if HMRC consider that the activities in question are a trade, taxpayers can make up to £1,000 per year from their ‘trade’ using the trading allowance that was introduced in April 2017. 



 

Latest News

Want to pay-off your student loan in full?
14/05/2019 - More...
Student Loans are part of the government’s financial support package for students in higher education in the UK.

Tax on a private pension you inherit
14/05/2019 - More...
Private pensions can be an efficient way to pass on wealth, but it is important to consider what, if any, tax will be

CGT and chattels
14/05/2019 - More...
A charge to Capital Gains Tax (CGT) usually arises after an asset is sold. However, there are special rules concerning

Newsletter

With our newsletter, you automatically receive our latest news per e-mail and get access to the archive including advanced search options!

» Sign up for the Newsletter
» Login

 

 

ICAEW-BLK RGB  

 

Save

Save

Copyright © 2019 - Goodier, Smith and Watts

Cookie Policy | Website Privacy Policy                                                                                                                                                                                                                                                         

Registered in England under the number 3724657