BIM20000 - Meaning of trade: contents
»Ê¹ÚÌåÓýappre is no statutory definition of ‘tradeâ€�. »Ê¹ÚÌåÓýapp only further statutory help is to say that ‘tradeâ€� includes a ‘venture in the nature of tradeâ€�. As a result the courts have established for themselves what amounts to a ‘tradeâ€�, and their decisions provide guidance when the point is in dispute.
Broadly, ‘tradeâ€� can be taken to refer to operations of a commercial kind by which the trader provides to customers for reward some kind of goods or services. »Ê¹ÚÌåÓýapp extension of the definition to ‘ventures in the nature of tradeâ€� allows for the inclusion of isolated or speculative transactions, although not all such transactions will be within the definition.
»Ê¹ÚÌåÓýapp courts have also found the so-called ‘badges of tradeâ€� to be helpful indicators of trading in some cases.
Having established that a trade, or a venture in the nature of trade, exists, the next question to consider is the scope of that trade. This may be relevant in establishing what income is included in the trading receipts, and what expenses are allowable.
This section also deals with the tax treatment of some activities which are at the fringes of trading, including gambling and illegal activities.
»Ê¹ÚÌåÓýapp final part of this section considers mutual trading, which is an important concept because a mutual trader is not liable to tax on any profits arising from the mutual trade. »Ê¹ÚÌåÓýapp section also discusses a number of matters under the broad heading of mutual trading that are not mutual trading as such but which frequently involve a mutual association, including the treatment of membersâ€� clubs and certain co-operatives and associations.
»Ê¹ÚÌåÓýapp guidance is laid out as follows.