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Wrong kind of gift?
KEY POINTS
- Many situations arise that HMRC considers to be trading but may not be.
- Informal transactions in which funds exchange between parties could wrongfully be regarded as trading income.
- HMRC is keen to establish a trade and identify taxable income.
- However the position may be more complicated.
Let’s say a client receives irregular sums of money from her wealthy friend who lives outside the UK. The friend makes the payments because the client provided her with accommodation and support when she had no money. However as time has passed payments from the wealthy friend are also made to reimburse the client for buying luxury items on her behalf. The question is whether there is now an activity in the nature of a trade and what if any amount is...
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