Motive relevant but not decisive

Evidence that an asset was acquired with the intention of re-selling it at a profit, without any view of holding it as an investment, is a good indication that a trade is being carried on, but is not decisive. The HMRC view is that the motive will carry less weight in the case of those assets (such as shares) that are more likely to be held as investments:

‘‘Shares may be bought with the intention of making a profit. However, because of the inherent investment nature of shares, in the absence of enough of the other badges of trade, the purchaser will be making and realising capital investments and not trading’ (BIM 20210).’

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