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ICAEW Tax Faculty Conference.
What is trading?
Rebecca Benneyworth began the day’s survey of the life of a business by considering how to tell whether an activity constitutes trading. Two principles emerge from case law:
- ‘trading’ is a bilateral relationship whereby the trader supplies goods or services to a customer for reward; and
- transactions undertaken solely for fiscal purposes that is to obtain a tax advantage – and not for commercial purposes are not trading transactions even if the outward characteristics of trading are present.
In the week of the conference the Eclipse film partnership lost its application for permission to appeal to the Supreme Court against the Court of Appeal ruling (Eclipse Film Partners No 35 LLP v CRC[2015] STC 1429) that it was not trading.
The Court of Appeal had held that the partners were not carrying on a trade and...
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