HMRC internal manual

Business Income Manual

Meaning of trade: exceptions and alternatives: illegal activities - introduction

You should check the other guidance available on GOV.UK from HMRC as Brexit updates to those pages are being prioritised before manuals.

Income Tax is charged on the profits of a trade, profession or vocation, and Corporation Tax is charged on the profits of a trade (see BIM14005). This basic position is not affected by the fact that the activities, either in whole or in part, are illegal.

The existence of a trade will depend upon the facts. However, it is probable that the meaning of trade will not extend to operations intended to deprive the lawful owner of property, contrary to law and against their will, of the use and enjoyment of that property.

Because of the complexity of law and accountancy relating to illegal activities you should contact Business Profits at an early stage if you consider that a taxpayer is taxable on the profits of an illegal activity.

The section on illegal activities contains the following further guidance on: