Newsfeed Search



A reminder – HMRC’s badges of trade
23/12/2021

The 'badges of trade' tests whilst not conclusive are used by HMRC to help determine whether an activity is a proper economic trade / business activity or merely a money-making by-product of a hobby.

The 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.

HMRC will consider the following nine badges of trade as part of their overall investigation as to whether a hobby is actually a trade:

  • Profit-seeking motive
  • The number of transactions
  • The nature of the asset
  • Existence of similar trading transactions or interests
  • Changes to the asset
  • The way the sale was carried out
  • The source of finance
  • Interval of time between purchase and sale
  • Method of acquisition

Even if HMRC consider that the activities in question are a trade, taxpayers can make up to £1,000 per year tax-free by claiming the trading allowance.


Contact Us

Grosvenor Partners LLP
Warwick House
65-66 Queen Street
London
EC4R 1EB

+44 (0) 20 7841 5888

This email address is being protected from spambots. You need JavaScript enabled to view it.
 

Membership


Follow Us

 | 

Download our Free Apps

Download our free App by searching My Accountants, access code: grosvenor


  

Follow Us