BIM20205 - Meaning of trade: badges of trade: summary
A summary of each ‘badge of trade� is shown below with a brief pointer to its meaning.
| Badge of trade | Guidance | Meaning |
|---|---|---|
| Profit-seeking motive | see BIM20210 | An intention to make a profit supports trading, but by itself is not conclusive. |
| »Ê¹ÚÌåÓýapp number of transactions | see BIM20230 | Systematic and repeated transactions will support ‘tradeâ€�. |
| »Ê¹ÚÌåÓýapp nature of the asset | see BIM20245 | Is the asset of such a type or amount that it can only be turned to advantage by a sale? Or did it yield an income or give ‘pride of possessionâ€�, for example, a picture for personal enjoyment? |
| Existence of similar trading transactions or interests | see BIM20270 | Transactions that are similar to those of an existing trade may themselves be trading. |
| Changes to the asset | see BIM20275 | Was the asset repaired, modified or improved to make it more easily saleable or saleable at a greater profit? |
| »Ê¹ÚÌåÓýapp way the sale was carried out | see BIM20280 | Was the asset sold in a way that was typical of trading organisations? Alternatively, did it have to be sold to raise cash for an emergency? |
| »Ê¹ÚÌåÓýapp source of finance | see BIM20300 | Was money borrowed to buy the asset? Could the funds only be repaid by selling the asset? |
| Interval of time between purchase and sale | see BIM20310 | Assets that are the subject of trade will normally, but not always, be sold quickly. »Ê¹ÚÌåÓýapprefore, an intention to resell an asset shortly after purchase will support trading. However, an asset, which is to be held indefinitely, is much less likely to be a subject of trade. |
| Method of acquisition | see BIM20315 | An asset that is acquired by inheritance, or as a gift, is less likely to be the subject of trade. |
»Ê¹ÚÌåÓýappse ‘badgesâ€� will not be present in every case and of those that are, some may point one way and some the other. »Ê¹ÚÌåÓýapp presence or absence of a particular badge is unlikely, by itself, to provide a conclusive answer to the question of whether or not there is a trade. »Ê¹ÚÌåÓýapp weight to be attached to each badge will depend on the precise circumstances.
»Ê¹ÚÌåÓýapp approach by the courts in using the badges of trade has been to decide questions of trade on the basis of the overall impression gained from a review of all the badges.