3.5.1 Badges of trade

There is no statutory definition or guidance as to what it means for a person to be trading. For both income and corporation tax purposes, ‘trade’ is defined as including any ‘venture in the nature of trade’. However, this is a circular definition, and no further clarification is provided by the legislation.

Accordingly, one must look to case law. According to Scott LJ, the word ‘trade’ must be given its ordinary meaning:

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