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HMRC internal manual

Business Income Manual

Meaning of trade: general: definition

S989 Income Tax Act 2007 (ITA 2007), S1119 Corporation Tax Act 2010 (CTA 2010)

The Taxes Acts give very little guidance on the meaning of the word ‘trade’. S989 ITA 2007 and S1119 CTA 2010 say that ‘trade’ includes any ‘venture in the nature of trade’.

There is no further statutory help. As a result the courts have established for themselves what amounts to a ‘trade’, or ‘trading’, and their decisions provide guidance when the point is in dispute.

‘Broadly, ‘trade’ 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. The extension of the definition to ‘ventures in the nature of trade’ allows for the inclusion of isolated or speculative transactions, although not all such transactions will be within the definition.’

Before the enactment of ITA 2007 and CTA2010, the equivalent definition was in S832(1) Income and Corporation Taxes Act 1988. It said that ’trade includes every trade, manufacture, adventure or concern in the nature of trade’. The decided cases on the meaning of trade deal with this earlier definition, but the principles established by them remain relevant to the new wording.