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HMRC internal manual

Business Income Manual

Meaning of trade: badges of trade: sales organisation

The way in which the sale is secured is relevant. Any form of organised activity designed to promote a sale is evidence in favour of trading.

For example, a sales campaign by advertisement or canvass or the organisation or employment of a selling agency or sales staff.

In Martin v Lowry [1926] 11TC297 the individual bought a very large quantity of linen with the intention of reselling it at a profit. In the course of this activity he set up a large and skilled organisation for disposing of the linen in smaller quantities including the establishment of a sales office; the employment of staff and an expert in linen; and an extensive advertising campaign. This sales organisation was an important factor in the Commissioners’ decision that he was trading, a view with which the courts agreed.

The absence of the normal business systems and structures that would be expected of a trader dealing in the particular asset may be a pointer against trading.