Serious business

Trading on a commercial basis

The taxpayer bought and sold shares. The issues were whether he was trading and if so whether he did so on a commercial basis with a view to profit. The taxpayer claimed he was but HMRC disagreed.

Referring to the badges of trade in the report of the Royal Commission on the Taxation of Profits and Income (1955) cmd 9474) the First-tier Tribunal said four of them – the length of the period of ownership the frequency and number of transactions the circumstances responsible for realisation and motive – indicated the taxpayer was trading.

The judge also referred to Lewis Emanuel & Son v White 42 TC 369 as authority that dealing in securities can be a trade. He said the size and frequency of the taxpayer’s dealing activities and the rapid and continuous turnover pointed towards a trade. He...