B1.403 What are the badges of trade?
The badges of trade are common characteristics of a trading activity. The original list of the badges of trade was originally set out by the Royal Commission on the Taxation of Profits and Income in 1955, since then case law has developed and HMRC consider that there are now nine badges of trade. Cases under consideration by the Tribunals and by the courts review whether an activity that is alleged to give rise to a trading profit or loss bears any of the 'badges of trade'.
Badges of trade and HMRC guidance
HMRC's summary of each badge of trade, with a brief pointer as to its meaning, is as follows1:
- Ìý
•ÌýÌýÌýÌý profit seeking motive (see B1.404, BIM20210). An intention to make a profit supports trading, but by itself is not conclusive
- Ìý
•ÌýÌýÌýÌý number of transactions (see B1.405, BIM20230). Systematic and repeated transactions will support there being a 'trade'
- Ìý
•ÌýÌýÌýÌý nature of the asset (see B1.406, BIM20245). Is the asset of such a
To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to Tolley+™ Research or register for a free trial
Web page updated on 17 Mar 2025 13:16