»Ê¹ÚÌåÓýapp

»Ê¹ÚÌåÓýapp definitions in S989 Income Tax Act 2007 (ITA 2007) and S1119 Corporation Tax Act 2010 (CTA 2010) are quite broad and even circular in some respects. However, it does make clear that activities that, in ordinary language, may not be a full-blown trade can nevertheless be within the charge to tax on trade profits.

»Ê¹ÚÌåÓýapp courts have often used the phrase ‘adventure in the nature of tradeâ€� to describe the test which brings activities within trading income. For example, in Edwards v Bairstow and Harrison [1955] 36TC at page 225 Lord Simonds said:

‘To say that a transaction is or is not an adventure in the nature of trade is to say that it has or has not the characteristics which distinguish such an adventure�.

»Ê¹ÚÌåÓýapp extended meaning in S989 ITA 2007 and S 1119 CTA 2010 is wide enough to bring within the charge on trade profits:

• an isolated transaction; see, for example, CIR v Fraser [1942] 24TC498, and
• a speculative adventure that yields an unexpected profit; see Wisdom v Chamberlain [1968] 45TC92.

However, not every isolated transaction or speculative adventure that yields a profit will be within the charge. For example, see Leeming v Jones [1930] 15TC333.

»Ê¹ÚÌåÓýapp profit has to be of an income nature and not a capital accretion and to decide this issue you will have to examine all the surrounding facts and circumstances.

Further guidance on the factors to be considered is at BIM20200 onwards.