"...every trade, manufacture, adventure, or concern in the nature of a trade..."[1]

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Stephen Ooi        Revenue Law         Tutorial Two

“…every trade, manufacture, adventure, or concern in the nature of a trade…”

This is what ICTA 1988 defines trade as. By its very nature this is a vague description and its leaves it open for the courts and commissioners to decide on the merits of each case whether a certain income can taken to be a trade.

The case law only heightens this and in my opinion is highly unsatisfactory and there should be more clarity on what constitutes a trade. Whilst I accept that there must be some lee-way given in respect to the individual facts of a case, the badges of trade and definition of a trade must be made clear for there to be any legal certainty a principle of utmost importance in large scale business transaction. Thankfully the courts and commissioners appear to be consistent in their judgments in their approach to the badges.

In respect to the case of Marson v Marton it was held that there was no trade as it was outside the taxpayers typical transactions.(in this case a one off purchase and sale of land) I accept this as it follows the badges of trade to the letter and takes into account all aspects of the case. It’s clear that the transaction was merely an investment and thus would not be taxable as a trade under ITTOIA (schedule D).

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Later cases present more of a problem. In regards to Ensign Tankers Ltd v Stokes, it was held by the commissioners that there was not a trading transaction taking place. On appeal to the court of appeal this decision was turned around and a trading transaction was held to be taking place. This however only took into account the single transaction the allowance was being claimed on. Upon going to the House of Lords a different view was taken. They stated that the case dealt with tax avoidance and thus the entire set of transactions was looked at (Ramsey ...

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