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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Meaning of trade: badges of trade: repeated transactions - later transactions reflecting on first

In deciding that a particular transaction is part of a trade it is permissible to take into account later transactions of the same sort.

For example, in Leach v Pogson [1962] 40TC585 an individual who had been assessed on his profits from setting up and selling driving schools claimed that the profit from the sale of the first school was a capital profit and not assessable to Income Tax. Although the individual had no intention of setting up a trade of establishing and selling driving schools when he set up his first school, he did so intend by the time he came to sell that school.

The court agreed that the Commissioners were entitled to take into account the many later transactions in deciding the nature of the first.