{"id":3903,"date":"2022-08-02T11:01:24","date_gmt":"2022-08-02T10:01:24","guid":{"rendered":"https:\/\/cloud9accountingteam.co.uk\/?p=3903"},"modified":"2022-08-02T11:02:45","modified_gmt":"2022-08-02T10:02:45","slug":"is-your-business-an-adventure-in-the-nature-of-trade","status":"publish","type":"post","link":"https:\/\/cloud9accountingteam.co.uk\/sk\/is-your-business-an-adventure-in-the-nature-of-trade\/","title":{"rendered":"Is your business an ‘adventure in the nature of trade’ ?"},"content":{"rendered":"

Sometimes it is evident that a trade is being undertaken — a plumbing business, a manufacturing business, an accountant or solicitor are all ‘trades’. However, not all trading activities are easily identifiable. If you buy and sell a property in relatively quick succession for example, is that a trade in HMRC’s eyes or investment? Each source of income is taxed differently so the distinction is important. Generally, profits made from the sale of land and buildings are taxable under the capital gains tax (CGT) rules which, in most circumstances, results in a lower tax bill than profits charged to income tax.<\/p>\n

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There is a definition of ‘trade’ to be found in both the Income Tax Act 2007 and the Corporation Tax Act 2010 but it is far from being clear stating that a trade is ‘any venture in the nature of trade’.<\/em> It has therefore been left to case law to delve deeper into the meaning. Using the various cases that have come before the courts in the last 20 years HMRC have compiled what are termed \u2018badges of trade\u2019<\/em>.<\/p>\n

At present HMRC lists nine ‘badges of trade’ being:<\/p>\n